The Oakman Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of $2.40 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, $493,500, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 210,000. The estimated costs for the Packaging Department, $76,250, will be allocated based on machine hours, and the estimated machine hours for the year are 25,000. In October, the company incurred 20,000 direct labor hours in the Mixing Department and 13,000 machine hours in the Packaging Department. 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 ? ÷ ? = allocation rate Mixing ? ÷ ? = ? Packaging ? ÷ ? = ? Requirement 2. Determine the total amount of overhead allocated in October. Begin by selecting the formula to allocate overhead costs. Allocated mfg. ? × ? = overhead costs Compute the overhead allocated in Octoberfor each department and the total for both departments. Mixing ? Packaging ? Total ?
The Oakman Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of $2.40 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, $493,500, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 210,000. The estimated costs for the Packaging Department, $76,250, will be allocated based on machine hours, and the estimated machine hours for the year are 25,000. In October, the company incurred 20,000 direct labor hours in the Mixing Department and 13,000 machine hours in the Packaging Department. 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 ? ÷ ? = allocation rate Mixing ? ÷ ? = ? Packaging ? ÷ ? = ? Requirement 2. Determine the total amount of overhead allocated in October. Begin by selecting the formula to allocate overhead costs. Allocated mfg. ? × ? = overhead costs Compute the overhead allocated in Octoberfor each department and the total for both departments. Mixing ? Packaging ? Total ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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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 $2.40 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, $493,500, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 210,000. The estimated costs for the Packaging Department,
$76,250, will be allocated based on machine hours, and the estimated machine hours for the year are 25,000. In October, the company incurred
20,000 direct labor hours in the Mixing Department and 13,000 machine hours in the Packaging Department.
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.
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Predetermined OH
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?
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÷
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?
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=
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allocation rate
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Mixing
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?
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÷
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?
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=
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Packaging
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=
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Requirement 2. Determine the total amount of overhead allocated in
October.
Begin by selecting the formula to allocate overhead costs.
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Allocated mfg.
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×
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=
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overhead costs
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Compute the overhead allocated in Octoberfor each department and the total for both departments.
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Mixing
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Packaging
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Total
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