47. Offshore Company makes 2 different types of boats, sail and fishing boats. T
ID: 2482615 • Letter: 4
Question
47. Offshore Company makes 2 different types of boats, sail and fishing boats. The company consists of two different departments, design & engineering and production. The company has decided to allocate overhead costs in each of the two cost pools. Data on estimated overhead follows:
Estimated Sail Fish
Activity: Driver Overhead Cost Estimate Estimate
Design # of designs $180,000 22 designs 23 designs
Production Labor hours $994,000 4,500 hours 2,500 hours
What overhead rates will be used in each department to assign costs to the sail boats?
Design Production
A. $8,182 $220.89
B. $88,000 $639,000
C. $4,000 $142.00
D. $4,000 $220.89
Explanation / Answer
overhead rates will be used in each department to assign costs to the sail boats
Design = $180,000/ 22 designs =$8,182 per design
Production =$994,000/4,500 hours =$220.89 per hour
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