Willard Company manufactures three different sizes of automobile sunscreens: large, medium, and small. Willard expects to incur $360,000 of overhead costs during the next fiscal year. Other budget information for the coming year follows:

Required
a. Use direct labor hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.
b. Use machine hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.
c. Describe a set of circumstances where it would be more appropriate to use direct labor hours as the allocation base.
d. Describe a set of circumstances where it would be more appropriate to use machine hours as the allocationbase.

Transcribed Image Text:

Large Medium Smal Total Direct labor hours 2,0 4,000 4,000 10,000 700 1,300 1,000 3,000 Machine hours