Question

James Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $35 per machine hour, while the Sanding Department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments: Actual results Assembly Department Sanding Department Direct labor hours used 8 5 Machine hours used 10 7 The cost for direct labor is $30 per direct labor hour and the cost of the direct materials used by Job 603 is $1,400. How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates

Answer 1

Total allocated overhead= $450

Step-by-step explanation:

Giving the following information:

The Assembly Department uses a departmental overhead rate of $35 per machine hour.

The Sanding Department uses a departmental overhead rate of $20 per direct labor hour.

Job 603:

Actual results Assembly Department Sanding Department

Direct labor hours used 8 5

Machine hours used 10 7

To allocate overhead to Job 603, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Assembly= 35*10= $350

Sanding= 20*5= $100

Total allocated overhead= $450