Linger Products Uses a Two-Stage Allocation Method to Assign Costs

question 54

Essay

Linger Products uses a two-stage allocation method to assign costs to its products.The following information has been provided for March:
Required:
(a)Allocate the manufacturing overhead to two cost pools: machine-related and labor-related.(b)Compute the predetermined overhead rate for the two pools,using machine hours and direct labor hours as the bases.(c)Compute the total costs of production for each of the two products.

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Definitions:

Insurance

A contract by which an insurance company, the insurer, promises to pay a sum of money or give something of value to another, either the insured or the beneficiary, to compensate for a specified loss.

Concurrent Property Ownership

Ownership of property by two or more parties at the same time, where each party has an undivided interest in the whole property.

Subrogation

The legal process by which one party steps into the shoes of another party, to pursue their rights against a third party, usually in insurance claims.

Indemnity

A contractual obligation of one party to compensate the loss incurred by another party due to the acts of the indemnitor or any other party.