Question

Mott Manufacturing allocates factory overhead using one cost pool with direct labor hours as the allocation base. Mott has two production departments, P1 and P2.The new accountant at Mon estimates that next year, the total factory overhead costs will be $5,000,000, and approximately 500,000 direct labor hours will be worked. The accountant also estimates that P1 will use 150,000 direct labor hours, and there will be about $3,000,000 in overhead costs in P1.P2 will use 350,000 direct labor hours, and there will be $2,000,000 in overhead costs in P2. Mon has two products, Al and Bi. It takes two direct labor hours in P1 and three direct labor hours in P2 to complete one unit of A1.lt takes one direct labor hour in P1 and four direct labor hours in P2 to complete one unit of Bl.

Required
Which product will be undercoated and which will be overcastted with the one-cost-pool system?
Support your answer with appropriate calculations.



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  • CreatedSeptember 23, 2013
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