Ryans operations are divided into metal casting and metal finishing. The casting
ID: 2503476 • Letter: R
Question
Ryans operations are divided into metal casting and metal finishing. The casting department uses a departmental overhead rate of $52 per machine hour. While the Finishing Deptartment uses a departmental overhead rate of $28 dollars oer direct labor hour. Job a216 uses the following
Casting Dept Direct labor 5
Casting Dept Machine hour 4
Finshing Direct labor 12
Machine hour 3
The cost of labor is $32 per direct labor hour and the direct materials cost is $1800
What was the total cost of job A216 if they use the departmental overhead rates to allocate manufacturing overhead? SHOW WORK WILL GIVE POINTS
Explanation / Answer
Overhead cost of JOB-A216 f they use the departmental overhead rates to allocate manufacturing overhead = Overhead rate per machine hour of casting department*Machine hours used in Casting department + Overhead rate per direct labor hour of casting department*Direct labor hours used in Casting department
= (52*4) + (28*12)
= 208 + 336
=$544
Note:-Since casting department is uses a departmental overhead rate of $52 per machine hour it will be multiplied by the no. of Machine hours used in Casting department & since the Finishing Deptartment uses a departmental overhead rate of $28 dollars per direct labor hour it will be multiplied by Direct labor hours used in Casting department .
To arrive at the overhead of job A216 we will add the cost of both the departments.
TOTAL COST OF JOB A216 = DIRECT MATERIALS + DIRECT LABOR + OVERHEAD
= 1800+ (5+12)*32 + 544
= 1800 + 544 + 544
=$2888
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