### Overhead Allocation in ManufacturingThe Oakman Company produces products in two departments: Mixing and Packaging. Initially, overhead was allocated using a single plantwide rate of $2.20, based on direct labor hours.Recently, the company refined its allocation system by assigning manufacturing overhead costs to two separate cost pools, one for each department:- **Mixing Department**: - Estimated overhead costs: $533,000 - Allocation base: Direct labor hours - Estimated direct labor hours for the year: 205,000- **Packaging Department**: - Estimated overhead costs: $120,750 - Allocation base: Machine hours - Estimated machine hours for the year: 35,000For October, the company's activity was:- Mixing Department: 5,000 direct labor hours- Packaging Department: 13,000 machine hours#### Requirement**Compute the predetermined overhead allocation rates** for each department, rounded to two decimal places.To calculate:1. **Formula**: \[ \text{Predetermined OH Allocation Rate} = \frac{\text{Estimated Overhead Costs}}{\text{Estimated Quantity of the Allocation Base}} \]2. **Apply the formula** to determine the allocation rate for each department: - Mixing: - Enter the estimated overhead and direct labor hours. - Packaging: - Enter the estimated overhead and machine hours.This detailed allocation process helps to accurately assign overhead costs, reflecting the specific activities and resource usage of each department.

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Description: ### Overhead Allocation in ManufacturingThe Oakman Company produces products in two departments: Mixing and Packaging. Initially, overhead was allocated using a single plantwide rate of $2.20, based on direct labor hours.Recently, the company refine

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The Oakman Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of $2.20 with direct labor hours as the allocation base. The company has refined its allocation system by separating manufacturing overhead costs into two cost pools-one for each department. The estimated costs for the Mixing Department, $533,000, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 205,000. The estimated costs for the Packaging Department, $120,750, will be allocated based on machine hours, and the estimated machine hours for the year are 35,000. In October, the company incurred 5,000 direct labor hours in the Mixing Department and 13,000 machine hours in the Packaging Department. Read the requirements. Requirement 1. Compute the predetermined overhead allocation rates. Round to two decimal places. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each department. Predetermined OH Estimated overhead costs Estimated qty of the allocation base allocation rate %3D Mixing

The Oakman Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of $2.20 with direct labor hours as the allocation base. The company has refined its allocation system by separating manufacturing overhead costs into two cost pools-one for each department. The estimated costs for the Mixing Department, $533,000, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 205,000. The estimated costs for the Packaging Department, $120,750, will be allocated based on machine hours, and the estimated machine hours for the year are 35,000. In October, the company incurred 5,000 direct labor hours in the Mixing Department and 13,000 machine hours in the Packaging Department. Read the requirements. Requirement 1. Compute the predetermined overhead allocation rates. Round to two decimal places. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each department. Predetermined OH Estimated overhead costs Estimated qty of the allocation base allocation rate %3D Mixing

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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