Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labor hours in the Assembly Department. At the beginning of 2020, the following estimates were provided for the coming year: Direct labor hours Machine hours Direct labor cost Manufacturing overhead costs Machining Direct labor hours Machine hours Direct material cost Direct labor cost 10,000 DLH 100,000 MH $80,000 $250,000 The accounting records of the company show the following data for Job #846: Machining 50 DLH 170 MH Assembly 90,000 DLH 5,000 MH $2,700 $400 $720,000 $360,000 Assembly 120 DLH 10 MH $1,600 $900 घ Required: 1. Compute the manufacturing overhead allocation rate for each department. 2. Compute the total cost of Job #846. 3. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.
Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labor hours in the Assembly Department. At the beginning of 2020, the following estimates were provided for the coming year: Direct labor hours Machine hours Direct labor cost Manufacturing overhead costs Machining Direct labor hours Machine hours Direct material cost Direct labor cost 10,000 DLH 100,000 MH $80,000 $250,000 The accounting records of the company show the following data for Job #846: Machining 50 DLH 170 MH Assembly 90,000 DLH 5,000 MH $2,700 $400 $720,000 $360,000 Assembly 120 DLH 10 MH $1,600 $900 घ Required: 1. Compute the manufacturing overhead allocation rate for each department. 2. Compute the total cost of Job #846. 3. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....
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![Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products.
Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the
basis of direct labor hours in the Assembly Department. At the beginning of 2020, the following estimates were
provided for the coming year:
Direct labor hours
Machine hours
Direct labor cost
Manufacturing overhead costs
Machining
Direct labor hours
Machine hours
Direct material cost
Direct labor cost
10,000 DLH
100,000 MH
$80,000
$250,000
The accounting records of the company show the following data for Job # 846:
Machining
50 DLH
170 MH
Assembly
90,000 DLH
5,000 MH
$2,700
$400
$720,000
$360,000
Assembly
120 DLH
10 MH
$1,600
$900
4
Required:
1. Compute the manufacturing overhead allocation rate for each department.
2. Compute the total cost of Job #846.
3. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbfa454cf-0cd3-4e6e-8430-5b1281734108%2F5c547795-5811-4770-b87d-54512f0e2186%2Fjtoar1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products.
Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the
basis of direct labor hours in the Assembly Department. At the beginning of 2020, the following estimates were
provided for the coming year:
Direct labor hours
Machine hours
Direct labor cost
Manufacturing overhead costs
Machining
Direct labor hours
Machine hours
Direct material cost
Direct labor cost
10,000 DLH
100,000 MH
$80,000
$250,000
The accounting records of the company show the following data for Job # 846:
Machining
50 DLH
170 MH
Assembly
90,000 DLH
5,000 MH
$2,700
$400
$720,000
$360,000
Assembly
120 DLH
10 MH
$1,600
$900
4
Required:
1. Compute the manufacturing overhead allocation rate for each department.
2. Compute the total cost of Job #846.
3. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.
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