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I am struggling on the allocated overhead was figured out from Chapter 7, Problem 17P in accounting for decision making and control (9th edition). This
I am struggling on the allocated overhead was figured out from Chapter 7, Problem 17P in accounting for decision making and control (9th edition). This is the problem. I found the solution on Chegg, but I cannot figure out how the person came up with the allocated overhead of $888,889 and 611,111.
A) Prepare a typical monthly income statement for LiqVita and Dry after allocating the common fixed overhead costs of $1,500,000 per month to the two product lines based on the relative proportions of total variable costs generated by each product. | |||
LiqVita | Dry | Total | |
Revenue | $2,000,000 | $1,575,000 | $3,575,000 |
Variable Cost | 1,200,000 | 825,000 | 2,025,000 |
Own Fixed Cost | 90,000 | 110,000 | 200,000 |
Allocated Overhead | 888,889 | 611,111 | 1,500,000.00 |
Net Income (loss) | ($178,889) | $28,889 | |
%Variable Cost | 59% | 41% |
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