60.1K

Verified Solution

Link Copied!

Walk Right Shoes Company has expected overhead costs of $3,000,000. Most of the the overhead costs are incurred providing production support to the direct labor force. Direct labor rates vary from $10.00 to $20.00 per hour, and more complex tasks are assigned to more skilled workers who have higher pay rates. Walk Right Shoes projects direct labor costs of $2,000,000 and 50,000 direct labor hours.

More complex tasks require proportionality more support then do the less complex tasks.

Each model/ size of shoe produced in a single production run and constitutes a job. During the year, the company produced 15,000 pairs of the model L 40 Size 6 dress show. A total of 15,000 direct labor hours were used to produce the 15,000 pairs of Model L 40 Size 6 dress shoe. The total cost of the 15,000 direct labor hours used to produce the 15,000 Model L 40 Size 6 dress shoe was $300,000 in direct labor costs.

(a) determine the amount of overhead assigned to (applied to) the production of the 15,000 pairs of Model L 40 Size 6 dress shoe produced if direct labor hours are used as the allocation basis.

(b) determine the amount of overhead assigned to (applied to) the production of the 15,000 pairs of Model L 40 Size 6 dress shoe produced if direct labor costs are used as the allocation basis.

Answer & Explanation Solved by verified expert

See Answer