1. Company: Apple

Scenario: Overhead Allocation in Electronics Manufacturing

Data:

• Total Overhead Costs: $2,000,000
• Cost Pools: Equipment Maintenance ($800,000), Utilities ($600,000), Administrative ($600,000)
• Allocation Bases: Machine Hours (20,000), Square Footage (15,000), Direct Labor Hours (10,000)

Requirements:

1. Allocate overhead costs to each cost pool.
2. Determine the overhead rate for each allocation base.
3. Calculate the overhead applied to a department using 4,000 machine hours, 3,000 square feet, and 2,500 direct labor hours.
4. Discuss the benefits of accurate overhead allocation.
5. Recommend improvements to the overhead allocation process.
6. Evaluate the impact of using advanced cost allocation methods on product pricing.