Linger Products uses a two-stage allocation method to assign costs to its products. The following information has been provided for March: Product 1 Product 2 Total Units 3,000 2,000 5,000 Machine hours 2,000 4,000 6,000 Direct labor hours 2,000 2,000 4,000 Direct materials $ 60,000 $ 60,000 $ 120,000 Direct labor 45,000 45,000 90,000 Manufacturing overhead Utilities (machine related) $ 3,000 Supplies (labor related) 8,000 Training (labor related) 20,000 Supervision (labor related) 17,000 Machine depreciation (machine related) 24,000 Lease on factory (machine related) 33,000 Miscellaneous (labor related) 5,000 Total manufacturing overhead $ 110,000 Required: (a) Allocate the manufacturing overhead to two cost pools: machine-related and labor-related. (b) Compute the predetermined overhead rate for the two pools, using machine hours and direct labor hours as the bases. (c) Compute the total costs of production for each of the two products.
Linger Products uses a two-stage allocation method to assign costs to its products. The following information has been provided for March: Product 1 Product 2 Total Units 3,000 2,000 5,000 Machine hours 2,000 4,000 6,000 Direct labor hours 2,000 2,000 4,000 Direct materials $ 60,000 $ 60,000 $ 120,000 Direct labor 45,000 45,000 90,000 Manufacturing overhead Utilities (machine related) $ 3,000 Supplies (labor related) 8,000 Training (labor related) 20,000 Supervision (labor related) 17,000 Machine depreciation (machine related) 24,000 Lease on factory (machine related) 33,000 Miscellaneous (labor related) 5,000 Total manufacturing overhead $ 110,000 Required: (a) Allocate the manufacturing overhead to two cost pools: machine-related and labor-related. (b) Compute the predetermined overhead rate for the two pools, using machine hours and direct labor hours as the bases. (c) Compute the total costs of production for each of the two products.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Linger Products uses a two-stage allocation method to assign costs to its products. The following information has been provided for March:
| Product 1 | Product 2 | Total | |||||||
| Units | 3,000 | 2,000 | 5,000 | ||||||
| Machine hours | 2,000 | 4,000 | 6,000 | ||||||
| Direct labor hours | 2,000 | 2,000 | 4,000 | ||||||
| Direct materials | $ | 60,000 | $ | 60,000 | $ | 120,000 | |||
| Direct labor | 45,000 | 45,000 | 90,000 | ||||||
| Manufacturing |
|||||||||
| Utilities (machine related) | $ | 3,000 | |||||||
| Supplies (labor related) | 8,000 | ||||||||
| Training (labor related) | 20,000 | ||||||||
| Supervision (labor related) | 17,000 | ||||||||
| Machine |
24,000 | ||||||||
| Lease on factory (machine related) | 33,000 | ||||||||
| Miscellaneous (labor related) | 5,000 | ||||||||
| Total manufacturing overhead | $ | 110,000 | |||||||
Required:
(a) Allocate the manufacturing overhead to two cost pools: machine-related and labor-related.
(b) Compute the predetermined overhead rate for the two pools, using machine hours and direct labor hours as the bases.
(c) Compute the total costs of production for each of the two products.
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