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Question - Bluefield Corp. has two products lines, A and B. Bluefield has identified the following information about its overhead and potential cost drivers:
Total overhead........... $112,500
Cost Drivers
Number of labor hours.......2,500
Number of machine hours..59,800
REQUIRED:
1. Suppose Bluefield Corp. uses a traditional costing system with number of labor hours as the cost driver. Determine the amount of overhead assigned to each product line if Product A requires 70 percent and Product B requires 30 percent.
2. Suppose Bluefield Corp. uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line if Product A consumes 22,100 machine hours and Product B consumes 37,700.
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