Question: Janie Manufacturing uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Fabrication and Finishing. The Fabrication Department uses a departmental overhead rate of $60 per machine hour, while the Finishing Department uses a departmental overhead rate of $12 per direct labor hour. Job 715 used the following direct labor hours and machine hours in the two departments: Fabrication Department Finishing Department Direct labor hours used 5 Machine hours used 9 3 6 The cost for direct labor is $40 per direct labor hour, and the cost of direct materials used by Job 715 is $1,500. How much manufacturing overhead would be allocated to Job 715 using the departmental overhead rates?

Question: Janie Manufacturing uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Fabrication and Finishing. The Fabrication Department uses a departmental overhead rate of $60 per machine hour, while the Finishing Department uses a departmental overhead rate of $12 per direct labor hour. Job 715 used the following direct labor hours and machine hours in the two departments: Fabrication Department Finishing Department Direct labor hours used 5 Machine hours used 9 3 6 The cost for direct labor is $40 per direct labor hour, and the cost of direct materials used by Job 715 is $1,500. How much manufacturing overhead would be allocated to Job 715 using the departmental overhead 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

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 31E: Chester Company provided information on overhead for its three producing departments as follows:...

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Lansing. Inc., provided the following data for its two producing departments: Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required: 1. Calculate the overhead rates for each department. 2. Using departmental rates, assign overhead to live two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours? 3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
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