Allocating overhead costs among products Nevin Company makes three products in its factory: plastic cups, plastic tablecloths

Exercise 12-4 Allocating overhead costs among productsNevin Company makes three products in its factory: plastic cups, plastic tablecloths, and plastic bottles. The expected overhead costs for the next fiscal year include the following.Factory manager’s salary$260,000Factory utility cost121,000Factory supplies 56,000Total overhead costs$437,000Nevin uses machine hours as the cost driver to allocate overhead costs. Budgeted machine hours for the products are as follows.Cups420 hoursTablecloths740Bottles1,140Total machine hours2,300Requireda. Allocate the budgeted overhead costs to the products.b. Provide a possible explanation as to why Nevin chose machine hours, instead of labor hours, as the allocation base.