Ashley Wright | 3/10/18 521 PM Quiz: Chapter 19 Review Quiz Time Remaining: 00:2

Question

Ashley Wright | 3/10/18 521 PM Quiz: Chapter 19 Review Quiz Time Remaining: 00:29:42 Submit Quiz This Question: 3 pts 10f 4,0 complete) | This Quiz: 12 pts possible pe The Overman Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of $2.20 with direct labor hours as the allocation base. The company has refined its allocation system by separating manufacturing overhead costs into two cost pools-one for each department. The estimated costs for the Mixing Department, $542,500, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 175,000. The estimated costs for the Packaging Department, $276,500, will be allocated based on machine hours, and the estimated machine hours for the year are 70,000. In October, the company incurred 43,000 direct labor hours in the Mixing Department and 13,000 machine hours in the Packaging Department. Read the requirements.

Explanation / Answer

Req 1: Pre-determined overheads rate for each Acivity: Mixing Estimated Overheads     / Estimated Direct labour hours     = Pre-determined OH rate MIxing $542500    / 175,000 DLH      = $3.10 per Labour hour Packaging Estimated Overheads      / Estimated Machine hours        = Pre-determined overhead rate Packaging $ 276,500     / 70,000 MH          = $ 3.95 per MH Req 2: Allocated Overheads        = Hours consumed during the year   * Pre-determined oh rate Allocated Overheads Mixing    = 43000 DLH         * $3.10 133300 Packaging    = 13,000 MH          * $3.95 51350 Overehads allocated: Mixing $133,300 Packaging $51,350

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