Channing Corporation makes two products (A1 and B2) that require direct materials, direct labor, and overhead. The following data refer to operations expected for next month.
A1 B2 Total
Revenue $ 220,000 $ 660,000 $ 880,000
Direct material 90,000 180,000 270,000
Direct labor 64,000 152,000 216,000
Overhead:
Direct-material related 72,900
Direct-labor related 69,120
Required:
Channing uses a two-stage cost allocation system, It uses direct-material costs to allocate direct-materials related overhead and direct-labor costs to allocate direct-labor related overhead costs.
a. Compute the direct-material related overhead rate for next month.
b. Compute the direct-labor related overhead rate for next month.
c. What is the total overhead allocated to product A1 next month?
d. What is the total overhead allocated to product B2 next month?
