Question

Production workers for Soloman Manufacturing Company provided 3,000 hours of labor in January and 2,000 hours in February. The company, whose operation is labor intensive, expects to use 40,000 hours of labor during the year. Soloman paid a $96,000 annual premium on July 1 of the prior year for an insurance policy that covers the manufacturing facility for the following 12 months.

Required
Explain why allocation is needed. Based on this information, how much of the insurance cost should be allocated to the products made in January and to those made in February?



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  • CreatedFebruary 07, 2014
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