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Assume the Spring Company produces two Products A and B. Both products are mixed in Department...

Assume the Spring Company produces two Products A and B. Both products are mixed in Department P1 and canned in Department P2. Most of the overhead costs are related to direct materials (DM) in P1, while most of the overhead costs in P2 are related to machine time. Data for a recent month follows:

Department

Overhead Costs

Product

Machine Hours

DM Costs

P1

$600,000

A

10,000

$500,000

B

40,000

$500,000

P2

$450,000

A

45,000

$20,000

B

30,000

$30,000

. If the company uses departmental rates based on machine hours then the total overhead allocated to A and B would be:

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