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    Overheads Allocation

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    Offshore Company makes two different types of boats sail and fishing boats. The company consists of two different departments, design & engineering, and production. The company has decided to allocate overhead costs in each of the two cost pools. Data on estimated overhead follows:

    Estimated Sail Fish
    Activity: Driver Overhead Cost Estimate Estimate
    Design # of designs $180,000 22 designs 18 designs
    Production Labor hours $945,000 4,000 hours 3,500 hours

    If the company produces and sells 22 sail boats, and each sail boat requires 180 labor hours, how much overhead will be assigned to each sail boat produced?

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    https://brainmass.com/business/business-management/overheads-allocation-563640

    Solution Preview

    Choose the answer depending upon the requirement of the question. These are the two possible answers:

    ANSWER 1:
    Production Overhead cost per labor hour = $945,000/[4000 + 3500] ==> $126 ...

    Solution Summary

    Offshore Company makes two different types of boats: sail and fishing boats. The company consists of two different departments, design & engineering, and production. The company has decided to allocate overhead costs in each of the two cost pools.

    $2.19

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