“Bangor Company manufactures two products, Velveeto and Fondant. Bangor has estimated overhead costs as follows: setting up machines ($160,000), machining ($300,000) and inspecting ($100,000). Information on the two products follows: Velveeto Fondant Direct labor hours 60,000 100,000 Machine setups 2,400 1,600 Machine hours 96,000 104,000 Inspections 3,200 2,800 Overhead is applied to Fondant using direct labor hours. What is the total amount of overhead charged to this product line using traditional costing?”,”$350,000Correct! The overhead rate is calculated by dividing estimated overhead divided by estimated direct labor hours. Then, the rate is multiplied by the actual activity. Rate = [($160,000 + $300,000 + $100,000) / 160,000 hours] = $3.50 per direct labor hourApplied = $3.50 × 100,000 = $350

“Bangor Company manufactures two products, Velveeto and Fondant. Bangor has estimated overhead costs as follows: setting up machines ($160,000), machining ($300,000) and inspecting ($100,000). Information on the two products follows: Velveeto Fondant Direct labor hours 60,000 100,000 Machine setups 2,400 1,600 Machine hours 96,000 104,000 Inspections 3,200 2,800 Overhead is applied to Fondant using direct labor hours. What is the total amount of overhead charged to this product line using traditional costing?”,”$350,000Correct! The overhead rate is calculated by dividing estimated overhead divided by estimated direct labor hours. Then, the rate is multiplied by the actual activity. Rate = [($160,000 + $300,000 + $100,000) / 160,000 hours] = $3.50 per direct labor hourApplied = $3.50 × 100,000 = $350

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