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Vernon Company makes three products in its factory: plastic cups, plastic tablecloths, and plastic bottles. The expected overhead costs for the next fiscal year include
Vernon Company makes three products in its factory: plastic cups, plastic tablecloths, and plastic bottles. The expected overhead costs for the next fiscal year include the following: Factory manager's salary Factory utility cost Factory supplies Total overhead costs $221,350 77,000 30,000 $328,350 Vernon uses machine hours as the cost driver to allocate overhead costs. Budgeted machine hours for the products are as follows: Cups Tablecloths Bottles Total machine hours 290 Hours 725 975 1,990 Required a. Allocate the budgeted overhead costs to the products. Product Allocation Rate x Weight of Base - Allocated Cost Cups Tablecloths Bottles Total
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