MagMag applies manufacturing overhead to each job using department overhead rate

Question

MagMag applies manufacturing overhead to each job using department overhead rates. The company's operations are divided into K and H. K uses a departmental overhead rate of $52 per machine hour, which H uses $28 per direct labor hour. Job 101 requires K to use 6 machine hours and H to use 5. Direct labor costs incurred for job 101 K were 160 and 384 for H. Wage rate is $32 per direct labor hour. How much total manufacturing overhead would be applied to JOb 101 using the departmental overhead costs?

Thank you. I would really appreciate it

Explanation / Answer

Overhead allocation for Job 101

Departmental overhead allocation

= Departmental overhead rate x Allocation base consumed by the job

Department K

= Machine hour rate x Number of machine hours required

= $52 x 6

= $ 312

Department H

= Labor hour rate x Number of labor hours consumed

= $28 x 5

= $140

So, overhead allocated to Job 101

= Overhead allocated for department K + Overhead allocated for department H

= $312 + $140

= $ 452

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