A Baker produces bread which goes through two operations, mixing and baking, bef

Question

A Baker produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year’s expected costs and activities are shown below. Mixing Baking Direct Labor hours 650,000 95,000 Machine hour 773,810 693,750 Overhead Cost 812,500 403,750 Compute Aztec’s departmental overhead rate for the mixing department based on direct labor hours. A. $1.50 per DLH. B. $4.25 per DLH. C. $1.25 per DLH. D. $0.58 per DLH. E. $1.05 per DLH. 3. Compute Aztec’s departmental overhead rate for the mixing department based on machine hours. A. $1.50 per DLH. B. $4.25 per DLH. C. $1.25 per DLH. D. $0.58 per DLH. E. $1.05 per DLH. Mixing Baking Direct labor hours 650,000 95,000 Machine hours 773,810 693,750 Overhead costs $812,500 $403,750 4. Compute Aztec’s departmental overhead rate for the baking department based on direct labor hours. A. $1.50 per DLH. B. $4.25 per DLH. C. $1.25 per DLH. D. $0.58 per DLH. E. $1.05 per DLH. 5. Compute Aztec’s departmental overhead rate for the baking department based on machine hours. A. $1.50 per DLH. B. $4.25 per DLH. C. $1.25 per DLH. D. $0.58 per DLH. E. $1.05 per DLH.

Explanation / Answer

1. Mixing department overhead rate/DLH = $ 812500/650000 = $ 1.25 per DLH i.e Answer in C.

2. Department overhead rate for mixing on machine hours = $ 812500/773810 = $ 1.05 per machine hour i.e answer is E.

3. Baking department overhead rate/DLH = $ 403750/95000 = $ 4.25 per DLH i.e Answer is B.

4. Department overhead rate for baking on machine hours = $ 403750/693750 = $ 0.58 per machine hour i.e answer is D.

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