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Chandler Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour

Accounting Dec 01, 2020

Chandler Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Chandler expects to incur $360,000 of overhead costs during the next fiscal year. Other budget information follows. Vogue Beauty Glamour Total Direct labor hours 2,000 4,000 6,000 12,000 Machine hours 1,200 1,400 1,400 4,000 If you use direct labor hours as the cost driver, what is the allocation rate per direct labor hour? Do not enter dollar signs or commas in your answers. Question 2 1 pts If you use direct labor hours as the cost driver, how much overhead cost would be allocated to the Vogue model?
Question 2 0/1 pts If you use direct labor hours as the cost driver, how much overhead cost would be allocated to the Vogue model? Multiply the allocation rate calculated in the previous problem by the direct labor hours for Vogue. Question 3 0 / 1 pts If you used machine hours as the cost driver, what is the allocation rate?
Question 4 0/1 pts If machine hours is used as the cost driver, how much overhead cost is allocated to Vogue? Multiply the machine hours allocation rate calculated in the previous question by the machine hours for Vogue. Question 5 0 / 1 pts Which cost driver would be more appropriate if the hats are primarily handmade? machine hours direct labor hours
Question 6 0 / 1 pts Which cost driver would be more appropriate if the hats are assembled on an automated assembly line? Direct labor hours Machine hours

Expert Solution

     
1 Allocation rate =$360,000 / 12,000 direct labor hours =$30 per direct labor hour  
     
2 Overhead cost allocated to Vogue =2,000*$30 =$60,000  
     
3 Allocation rate =$360,000 / 4,000 machine hours =$90 per machine hours  
     
4 Overhead cost allocated to Vogue =1,200*$90 =$108,000  
     
5 If Hats are primarily handmade then Direct labor hours is best for allocation  
     
6 If Hats are assembled on an automated assembly line then Machine hours is best for allocation
     
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