Question

Beta Company produced 2,000 units of product X and 800 units of product Y. Product X uses $3 of direct materials per unit and $20 of direct labor per unit. Product Y uses $5 of direct materials per unit and $30 of direct labor per unit. Total indirect overhead costs were $32,000, allocated based on direct labor dollars. What are the allocated overhead costs for X and Y?

Answer 1

Direct Material cost for product x=$3*2000=$6000 as direct material per unit * no of units

DIRECT LABOR COST OF PRODUCT X=$20*2000=$40000  as direct labor cost per unit * no of units

Direct Material cost for product Y=$5*800=$4000

DIRECT LABOR COST OF PRODUCT Y=$30*800=$24000

Indirect Overhead cost for product x= $32000*40000/(40000+24000) ..as based on direct labor dollars

=32000*40000/64000=$20000

indirect Overhead cost for product Y=$32000-$20000=$12000

So allocated overhead cost for X=$ 6000+40000+20000=$66000

as total overhead cost =direct material cost +direct labor cost +indirect overhead cost of a product

allocated overhead cost for Y=$ 4000+24000+12000=$40000