Reference no: EM13597969

Walker Co. makes three products in its factory: plastic cups, plastic tableclothes, and plastic bottles. The expected overhead costs for the next fiscal year include the following.

• Factory manager's salary $130,000
• Factory utility cost 60,500
• Factory supplies 28,000
• Total overhead costs $218,500

Walker uses machine hours as the cost driver to allocate overhead costs. Budgeted machine hours for the products are as follows:

• Cups 420 hours
• Tablecloths 740
• Bottles 1,140
• Total machine hours 2,300

Required

a. Allocate the budgeted overhead costs to products.
b. Provide a possible explanation as to why Walker chose machine hours, instead of labor hours, as the allocation base.