Stealth,Inc

question 139

Multiple Choice

Stealth,Inc.produces two types of drones,rotary and fixed wing.Stealth estimated $765,000 of manufacturing overhead,and 51,000 machine hours for the year.The allocation base for overhead costs is machine hours.The rotary model actually consumed 21,000 machine hours,and the fixed wing type consumed 30,000 machine hours.How much overhead is allocated to the fixed wing model?

• A)$315,000
• B)$450,000
• C)$210,000
• D)$150,000

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Definitions:

Overhead Allocation Methods

Techniques used to assign indirect costs to products, services, or departments, helping in accurately reflecting production costs.

Overhead Rate

Refers to the cost of running a business that cannot be directly attributed to a specific product or service, often expressed as a percentage of labor or material costs.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing more accurate product costing.

Departmental Overhead Rate

A rate used to allocate overhead costs to specific departments, based on criteria like department size, expenditure, or machine hours used.