5, Toyz Manufacturing uses departmental cost driver rates to apply manufacturing

Question

5, Toyz Manufacturing uses departmental cost driver rates to apply manufacturing overhs costs to products. Manufacturing overhead costs are applied on the basis of the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2014, the following estimates were provided for ad machine-hours in Machining Assembly Direct labor-hours (dlh) Machine-hours (mh) Direct labor cost Manufacturing overhead costs 10,000 dlh 150,000 dlh 100,000 mh 5,000 mh $80,000 $720,000 $200,000 $450,000 The accounting records of the company show the following data for Job #807. 50 dlh 170 mh 120 dlh 10 mh Direct labor-hours (dlh) Machine-hours (mh) Direct material cost Direct labor cost $1,600 $3,000 $1,500 $400 Required: a. Compute the manufacturing overhead allocation rate for each department. b. Compute the total cost of Job #897.

Explanation / Answer

Solution:

From the given data we need to find the given a and b requirements,

Answer a: The manufacturing overhead allocation rate for each department:

Answer b :  The total cost of job #897:

Particulars Amount ($) Machining (rate for machine hours) = $200,000 / 100,000 $2 Assembly (rate for direct hours) =$450,000 / 150,000 $3

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