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18 September, 14:08

X Company has two production departments, A and B. At the start of 2018, the following budgeted cost information was available: Overhead : Department A : $390,000, Department B $190,000 The following activity information is for X Company's only two jobs, Job 11 and Job 22, both of which were started and completed during the year: Job 11 Job 22 Direct labor hours in Department A 1,646 732, Direct labor hours in Department B 274 1,186 Machine hours in Department A 2,000 2,580, Machine hours in Department B 1,660 1,460 Using a departmental allocation system with machine hours as the cost driver in Department A and direct labor hours as the cost driver in Department B, what was the allocation to Job 11 [round overhead rate (s) to two decimal places]?

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  1. 18 September, 17:47
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    Instructions are listed below

    Explanation:

    Giving the following information:

    Overhead:

    Department A : $390,000

    Department B $190,000

    Job 11:

    Direct labor hours in Department B 274

    Machine hours in Department A 2,000

    Job 22:

    Direct labor hours in Department B 1,186

    Machine hours in Department A 2,580

    Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base=

    Department A = 390,000 / (2000 + 2580) = $85.15 per direct machine hour

    Department B = 190,000 / (274 + 1186) = $130.14 per direct labor hour.

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

    Job 11:

    Dept A = 85.15*2580 = $219,687

    Dept B = 130.14*274 = $36,658.36
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