Compute the amount of overhead assigned to each product

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Problem - Bramble Company produces two products: MB-R and MB-X. Currently, Bramble allocates overhead based on direct labour hours. Overhead is estimated at $381,000. The cost accountant realizes that there are some differences in how resources are being used in producing these two components and is considering the use of ABC to allocate overhead. She determines that overhead is caused by testing and inspections, $138,000; machine setup, $78,000; machine stamping, $114,000; and plant maintenance, $51,000. Bramble estimates the following activities related to the overhead costs:

Activity

Cost Driver

MB-R

MB-X

Testing and inspections

Number of testing and inspections

460

460

Machine setup

Number of setups

120

80

Machine stamping

Number of machine hours

24,000

14,000

Plant maintenance

Direct labour hours

1,200

2,200

Use ABC cost hierarchy to classify each activity.

Required - Compute the amount of overhead assigned to each product using the traditional (i.e., direct labour hours) costing method.

Reference no: EM132713403

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