Question
Steering Company has expected overhead costs of $14,400,000. The majority of the overhead costs are incurred providing production support to the direct labor force. Direct
Steering Company has expected overhead costs of $14,400,000. The majority of the overhead costs are incurred providing production support to the direct labor force. Direct labor rates vary from $10 to $20 per hour, and more complex tasks are assigned to more skilled workers who have higher pay rates. Steering projects direct labor costs of $2,880,000 and 360,000 direct labor hours. More complex tasks require proportionally more support than do the less complex tasks. Each model/size of shoe is produced in a single production run and constitutes a job. During the year, the company produced 8,400 pairs of the model K25, size 8 dress shoe. A total of 10,400 direct labor hours, costing $72,800, were assigned to the job.
(a) Determine the amount of overhead assigned to the model K25, size 8 dress shoe, using both direct labor hours and direct labor cost as the allocation base
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