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The overhead costs incurred to do 100 machine setups was $200,000. Product A had 70 setups...

The overhead costs incurred to do 100 machine setups was $200,000. Product A had 70 setups and Product B had 30 setups. How much overhead should be allocated to Product A?

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Answer #1

Overhead allocation rate

= Overhead cost/Allocation base

= 200,000/100 machine setups = 2,000 per setup.

Overhead cost allocated to product A

= 70 setups * 2000 per setup

= 140,000

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