Big trail running company has started to produce running apparel in addition to the trail running shoes that they have manufactured for years. they feel that a departmental overhead rate would best reflect their overall manufacturing overhead usage. based on research the following information was gathered for the upcoming year: machining department finishing department estimated manufacturing overhead by department $800,000 $100,000 trail running shoes 350,000 machine hours 19,000 direct labor hours running apparel 50,000 machine hours 61,000 direct labor hours manufacturing overhead is driven by machine hours for the machining department and direct labor hours for the finishing department. at the end of the year, the following information was gathered related to the production of the trail running shoes and running apparel: machining department finishing department trail running shoes 352,000 hours 18,500 hours running apparel 47,000 hours 62,000 hours how much manufacturing overhead will be allocated to the trail running shoes

Total allocated overhead= $903,390

Explanation:

Giving the following information:

Estimated Manufacturing Overhead by Department:

Machining Department $800,000

Finishing Department   $100,000

Estimated Trail Running Shoes:

350,000 machine hours

19,000 direct labor hours

Manufacturing overhead is driven by:

Machine hours for the machining department.

Direct labor hours for the finishing department.

Actual information:

Machine hours= 352000

Direct labor= 18,500 hours

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Machining= 800,000/350000= $2.29 per machine hour

Finishing= 100,000/19000= $5.26 per direct labor hour

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Machining= 2.29*352000= $806,080

Finishing= 5.26*18500= $97,310

Total allocated overhead= $903,390

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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