Question

Bond 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 $20 per machine hour, while the Sanding Department uses a departmental overhead rate of $15 per direct labor hour. Job 542 used the following direct labor hours and machine hours in the two departments: Actual results Assembly Department Sanding Department Direct labor hours used 4 3 Machine hours used 9 5 The cost for direct labor is $25 per direct labor hour and the cost of the direct materials used by Job 542 is $1,200. What was the total cost of Job 542 if Bond Industries used the departmental overhead rates to allocate manufacturing overhead

Answer 1

Total cost= $1,600

Step-by-step explanation:

First, we need to allocate overhead to each department:

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

Assembly Department= 20*9= $180

Sanding Department= 15*3= $45

Now, we can calculate the total cost of Job 542:

Total cost= 1,200 + (25*7) + (180 + 45)

Total cost= $1,600