Question

Mckenny, Inc., manufactures and sells two products: Product P9 and Product X2. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production 200 100 Direct Labor- Hours Per Unit 6.0 5.0 Total Direct Labor- Hours 1,200 500 1,700 Product P9 Product x2 Total direct labor-hours The direct labor rate is $28.20 per DLH. The direct materials cost per unit is $140.60 for Product P9 and $107.50 for Product X2. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Estimated Activity Overhead Activity Cost Pools Measures Cost Labor-related DLHS $ 45,084 Production orders orders 119,964 Order size MHS 459,818 $624,866 Product P9 Product x2 1,200 500 600 700 3,200 2,900 Total 1,700 1,300 6,100 If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product P9 would be closest to: (Round

Answer 1

Answer----------Overhead to be allocated = $441,084 or $441,082

Working

A	Estimated Manufacturing overheads	$         624,866.00
B	Estimated Direct labor hours	1700
C=A/B	Predetermined overhead rate	$                 367.57
D	Hours used in P9	1200
E=D x C	Overhead allocated	$441,084