Calculating Departmental Overhead Rates Using Post-Allocation Costs Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Support Departments Producing Departments Human General Resources Factory Fabricating Assembly $160,000 $340,000 Fabricating department Assembly department 60 $114,600 80 $93,000 170 1,000 5,700 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Valron Company uses the direct method of support department cost allocation. Solve for the allocated costs to Fabricating and Assembly using the direct method of support department cost allocation. The Fabricating Department overhead rate is based on normal activity of 82,000 machine hours. The Assembly Department overhead rate is based on normal activity of 160,000 direct labor hours. Job 316 required six machine hours in Fabricating and four direct labor hours in Assembly. Total direct materials cost $120, and total direct labor cost was $80. Required: 1. Calculate the overhead rate for Fabricating based on machine hours and the overhead rate for Assembly based on direct labor hours. If required, round your answers to the nearest cent. Use the rounded values for subsequent calculations. 13,300 Overhead Rate per mach. hr. per DLH 2. Using the overhead rates calculated in Requirement 1, calculate the cost of Job 316. If required, round your answer to the nearest cent. $ 3. What if Job 316 had required one machine hour in Fabricating and four direct labor hours in Assembly? Direct labor and direct materials costs remained the same. Calculate the new cost of Job 316. If required, round your answer to the nearest cent.
Calculating Departmental Overhead Rates Using Post-Allocation Costs Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Support Departments Producing Departments Human General Resources Factory Fabricating Assembly $160,000 $340,000 Fabricating department Assembly department 60 $114,600 80 $93,000 170 1,000 5,700 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Valron Company uses the direct method of support department cost allocation. Solve for the allocated costs to Fabricating and Assembly using the direct method of support department cost allocation. The Fabricating Department overhead rate is based on normal activity of 82,000 machine hours. The Assembly Department overhead rate is based on normal activity of 160,000 direct labor hours. Job 316 required six machine hours in Fabricating and four direct labor hours in Assembly. Total direct materials cost $120, and total direct labor cost was $80. Required: 1. Calculate the overhead rate for Fabricating based on machine hours and the overhead rate for Assembly based on direct labor hours. If required, round your answers to the nearest cent. Use the rounded values for subsequent calculations. 13,300 Overhead Rate per mach. hr. per DLH 2. Using the overhead rates calculated in Requirement 1, calculate the cost of Job 316. If required, round your answer to the nearest cent. $ 3. What if Job 316 had required one machine hour in Fabricating and four direct labor hours in Assembly? Direct labor and direct materials costs remained the same. Calculate the new cost of Job 316. If required, round your answer to the nearest cent.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Calculating Departmental Overhead Rates Using Post-Allocation Costs
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.
Direct costs
Normal activity:
Number of employees
Square footage
Support Departments Producing Departments
Human
Resources
General
Factory Fabricating Assembly
$160,000 $340,000
1,000
60
Overhead Rate
$114,600
80
per mach. hr.
per DLH
$93,000
5,700
13,300
The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Valron Company uses
the direct method of support department cost allocation. Solve for the allocated costs to Fabricating and Assembly using the direct method of support department cost allocation. The Fabricating
Department overhead rate is based on normal activity of 82,000 machine hours. The Assembly Department overhead rate is based on normal activity of 160,000 direct labor hours.
Job 316 required six machine hours in Fabricating and four direct labor hours in Assembly. Total direct materials cost $120, and total direct labor cost was $80.
Required:
1. Calculate the overhead rate for Fabricating based on machine hours and the overhead rate for Assembly based on direct labor hours. If required, round your answers to the nearest cent. Use the
rounded values for subsequent calculations.
170
Fabricating department
Assembly department
2. Using the overhead rates calculated in Requirement 1, calculate the cost of Job 316. If required, round your answer to the nearest cent.
$
3. What if Job 316 had required one machine hour in Fabricating and four direct labor hours in Assembly? Direct labor and direct materials costs remained the same. Calculate the new cost of Job 316.
If required, round your answer to the nearest cent.
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