Pro Tool Company expects to produce 13,000 total units during the current period

Question

Pro Tool Company expects to produce 13,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below: UNIT LEVEL $22,000 2,000 ïabor hrs PRODUCT LEVEL $6,000 ?40 setups % of use 13,000 units ACTIVITIES: BATCH LEVEL $22,400 FACILITY LEVEL $91,000 Cost cost Driver Production of 1,000 units of an auto towing tool required 500 labor hours, 14 setups, and consumed 30% of the product sustaining activities. How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours? (Do not round intermediate calculations.)

Explanation / Answer

OH rate per DLH: Total estaimted OH 141400 (22000+22400+6000+91000) Divide: Total DLH 2000 OH rate per DLH: 70.7 Total OH for product: Number of DLH used 500 Oh rate per DLH 70.7 Total OH for product: 35350

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