Question

Johnson Enterprises uses departmental overhead rates to allocate manufacturing overhead to jobs. The company has two divisions: Production and Assembling. The Production Division uses a departmental overhead rate of $40 per machine hour, while the Assembling Division uses a departmental overhead rate of $25 per direct labor hour. Job 757 used the following direct-labor hours and machine hours in each division.

Actual Results
Production Division
Assembling Division
Direct labor (DL) hours
10
7
Machine Hours
12
9
The cost for direct labor is $35 per hour and the cost of the direct materials used by Job 757 is $1,500.
How much manufacturing overhead would be allocated to Job 757 using the departmental overhead rates?

Answer 1

$665

Step-by-step explanation:

The computation of the manufacturing overhead is shown below:

= Departmental overhead rate per machine hour × number of machine hours + departmental overhead rate per direct labor hour × number of direct labor hours

= $40 × 12 hours + $25 × 9 hours

= $480 + $225

= $665

We use only the departmental overhead rate for finding out the manufacturing overhead account