A manufacturing company allocates overhead costs using direct labor hours and machine hours: Direct labor hours 20,000, machine hours 10,000, total overhead costs $300,000.

• Requirements:
  • Allocate overhead costs to products using the direct labor hours method.
  • Allocate overhead costs to products using the machine hours method.
  • Compare the results of both allocation methods.
  • Discuss the advantages and disadvantages of each allocation method.