Question Help * The Oral Company manufactures products in tao departmant Mixing

ID: 2553792 • Letter: Q

Question

Question Help * The Oral Company manufactures products in tao departmant Mixing and Packaging. Tha company was allocating manutacturing ovamead using a aingle plantmice rate at $2.40 with direct abor hours as the allocaton bae The company hes refined its allocation system by separaing manufactuting overhead costs into tmo cost pools-one or each depart ent The est mated costs f the M* ng Depart ent 3535.500 will be sl oeste based on direct la or hours and the esti sted direct labor hou s ?e yes are 170,000 The estimated costs fe the Packag ng Department. 3120.000 wil be sloested based on naehine hours. and the estimated machine hoursfor the year are 30.000. In Ottober. the company incurred 42.000 direct labor hours in the Mxing Department and 8.000 machine hours in the Packaging Department Read the OVAMAnts Requirement 1. Compute the predetermined ovechead alocation rates. Round to two decimal places Begin by selecting the formula to calculate the predetemined overheed (OH) alocation rate. Then enter the amounts to compute the sllocaton rate for each department. Predetermined OH -allocation rate Mixing Packaging Requirement 2. Determine the totel amount of overhead allocated in October Begin by electing the formula to a locate overhesd coats Allocated mig. Compute the overhead aloaated in October for caah department and the total for both departments Mixing Packaginp Total

Explanation / Answer

Solution:

Part 1 – Predetermined Overhead Allocation Rates

Estimated Manufacturing Overhead

Allocation Base

Predetermined OH Allocation Rate

Mixing

$535,500

170000 DLHs

$3.15

Packaging

$120,000

30,000 MHs

$4.00

Part 2 – Total amount of overhead allocated in October

Allocation Base usage x Predetermined Overhead Rate = Allocated MFG. Overhead Costs

Mixing = 42,000 DLHs x $3.15 = $132,300

Packaging = 8,000 MHs x $4 = $32,000

Total (132,300 + 32,000) = $164,300

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