Leonard Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Building and Inspection. The Building Department uses a departmental overhead rate of $18 per machine hour, while the Inspection Department uses a departmental overhead rate of $15 per direct labour hour. Job 611 used the following direct labour hours and machine hours in the two departments:
The cost for direct labour is $25 per direct labour hour and the cost of the direct materials used by Job 611 is $1,500.
What was the total cost of Job 611 if Leonard Industries used the departmental overhead rates to allocate manufacturing overhead?
A) $1,700
B) $1,844
C) $1,880
D) $1,838
E) $1,910

Question

Leonard Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Building and Inspection. The Building Department uses a departmental overhead rate of $18 per machine hour, while the Inspection Department uses a departmental overhead rate of $15 per direct labour hour. Job 611 used the following direct labour hours and machine hours in the two departments:
 The cost for direct labour is $25 per direct labour hour and the cost of the direct materials used by Job 611 is $1,500.
What was the total cost of Job 611 if Leonard Industries used the departmental overhead rates to allocate manufacturing overhead?
A) $1,700 
B) $1,844 
C) $1,880 
D) $1,838 
E) $1,910

Quizplus · Accepted Answer

Labour ($25 × 6 hrs) + ($25 × 6 hrs) = 200.00
Materials = 1,500.00
Overhead
Bldg dept $18 × 10 hrs = 180.00
Inspect dep $15 × 2 hrs = 30.00
Total = 1,910.00

Leonard Industries Uses Departmental Overhead Rates to Allocate Its Manufacturing