Allocating indirect cost over varying levels of production On January 1, Glaze Corporation paid the annual royalty

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Allocating indirect cost over varying levels of production On January 1, Glaze Corporation paid the annual royalty of $720,000 for rights to use patented technology to make batteries for laptop computers. Glaze plans to use the patented technology to produce five different models of batteries. Glaze uses machine hours as a common cost driver and plans to operate its machines 48,000 hours in the coming year. The company used 3,000 machine hours in June and 3,600 hours in July. 

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Why would Glaze need to allocate the annual royalty payment rather than simply assign it in total to January production? How much of the royalty cost should Glaze allocate to products made in June and those made in July? 

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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