Question

Manufacturing overhead is applied to the product based on machine hours used in each department under the rate of $20 per machine hour. The total machine hours are $60,000 of which $25,000 are related to the Mixing Department and the remaining are related to the Baking Department.

Answer 1

• Total amount of manufacturing overhead applied to the baking department is $700,000
• Total amount of manufacturing overhead applied to the mixing department is $500,000

Step-by-step explanation:

manufacturing standard overhead rate $20 per machine hour (60,000 total machine hours)

• mixing department = 25,000 machine hours x $20 = $500,000
• baking department = 60,000 - 25,000 = 35,000 machine hours x $20 = $700,000
• total overhead cost = $1,200,000 (equivalent to 60,000 machine hours)