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Question #3 The lead accountant has compiled the following data in preparation for allocating overhead to three cost drivers. Overhead Costs Utilities Admin/MGMT Factory Costs

Which of the three methods causes the Final Product Cost of Widget-3 to exceed $800? SHOW CALCULATIONS. In 30 words or less, why did this occur?\

Utilities	$110,000	Utilities (phone, electric, water, gas, etc.)
Admin/MGMT	$520,000	CEO, VPs, Supervisors, Secretary staff costs
Factory Costs	$870,000	Building lease & equipment
TOTAL OVERHEAD	$1,500,000

	Labor Hrs Per Widget	Direct Labor Cost per Widget	Std Labor Rate ($/hr):	$30.00
Widget-1	4	$120.00
Widget-2	8	$240.00
Widget-3	16	$480.00

Drivers
Units Produced in Factory (all inclusive)	45,000	Widget-1	25,000	units per month
		Widget-2	15,000	units per month
		Widget-3	5,000	units per month
Direct Labor Hours	300,000	Widget-1	100,000	hours per month
		Widget-2	120,000	hours per month
		Widget-3	80,000	hours per month
Raw Material Costs	$25.00	per unit of Widget-1
	$50.00	per unit of Widget-2
	$200.00	per unit of Widget-3

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