Asked by
Leyian Kariuki
on Dec 01, 2024Verified
A company estimates that costs for the next year will be $500,000 for indirect labor,$50,000 for factory utilities,and $1,000,000 for the CEO's salary.The company uses machine hours as its overhead allocation base.If 25,000 machine hours are planned for this next year,then a product requiring 10 machine hours will be assigned $220 in overhead.
Allocation Base
A measure or statistic that is used to distribute costs among different departments, projects, or products.
Overhead
Refers to the ongoing business expenses not directly tied to creating a product or service, including rent, utilities, and administrative costs.
- Acknowledge the employment of direct labor hours and machine hours as allocation bases within different overhead costing strategies.
Verified Answer
BS
Learning Objectives
- Acknowledge the employment of direct labor hours and machine hours as allocation bases within different overhead costing strategies.
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