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27 June, 17:25

Lucas 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 $ 60 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:

Direct labor hours usedAssembly Department - 8

Sanding Department - 5

Machine hours used

Assembly Department - 10Sanding Department - 7

The cost for direct labor is $32 per direct labor hour and the cost of the direct materials used by Job 603 is $1351.

What was the total cost of Job 603 if James Industries used the departmental overhead rates to allocate manufacturing overhead?

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  1. 27 June, 18:29
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    Total cost = $2467

    Explanation:

    Giving the following information:

    The Assembly Department uses a departmental overhead rate of $ 60 per machine hour.

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

    Direct labor hours used

    Assembly Department - 8

    Sanding Department - 5

    Machine hours used

    Assembly Department - 10

    Sanding Department - 7

    The cost for direct labor is $32 per direct labor hour and the cost of the direct materials used by Job 603 is $1351.

    Total cost = direct material + direct labor + MOH

    Total cost = 1351 + (13*32) + (60*10 + 20*5) = $2467
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