Question

Furniture Company manufactures tables. It has two manufacturing departments: Department A and B. The company uses a budgeted overhead rate for applying overhead to production. In March, the two production departments had budgeted allocation bases of 4,000 machine-hours in Department A and 8,000 direct manufacturing labor-hours in Department B. The budgeted manufacturing overheads for the month were $57,500 and $62,500, respectively. For Job A, the actual costs incurred in the two departments were as follows: Department A Department B Direct materials purchased $4,000 $1,750 Direct materials used 3,250 1,350 Direct manufacturing labor 5,250 5,350 Direct labor hours 100 300 Machine hours 800 200 What is the total cost of Job A?

Answer 1

The total cost of Job A is $29,044

Step-by-step explanation:

The computation of the total cost is shown below:

= Direct materials used for Department A + Direct materials used for Department B + Direct manufacturing labor for Department A + Direct manufacturing labor for Department B + Applied overhead for Department A + Applied overhead for Department B

where,

Applied overhead for Department A = (Budgeted manufacturing overheads ÷ machine-hours) × Department A machine hours

= ($57,500 ÷ 4,000 machine-hours) × 800 machine-hours

= $11,500

Applied overhead for Department B = (Budgeted manufacturing overheads ÷ Direct labor hours) × Department B Direct labor hours

= ($62,500 ÷ 8,000 Direct labor hours) × 300 Direct labor hours

= $2,344

The other items values would remain the same

Now put these values to the above formula

So, the value would equal to

= $3,250 + $1,350 + $5,250 + $5,350 + $11,500 + $2,344

= $29,044