Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 24

Account Analysis, Two-Stage Allocation, and Product Costing
Tiger Furnishings's CFO believes that a two-stage cost allocation system would give managers better cost information. She asks the company's cost accountant to analyze the accounts and assign overhead costs to two pools: overhead related to direct labor cost and overhead related to machine-hours. The analysis of overhead accounts by the cost accountant follows:

All other information is the same as in Exercise 6-30.
Required
a. Draw the cost flow diagram that illustrates the two-stage cost allocation of overhead for Tiger Furnishings using the results of the cost accountant's analysis of accounts.
b. Compute the individual product costs assuming that Tiger Furnishings uses direct labor costs and machine-hours to allocate overhead to the products.