Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $60 per machine hour, while the Sanding Department uses a departmental overhead rate of $30 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments: The cost for direct labor is $35 per direct labor hour and the cost of the direct materials used by Job 542 is $1500.
What was the total cost of Job 542 if Lucas Industries used the departmental overhead rates to allocate manufacturing overhead?
A)$2060
B)$2820
C)$2745
D)$2025

Question

Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $60 per machine hour, while the Sanding Department uses a departmental overhead rate of $30 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments:  The cost for direct labor is $35 per direct labor hour and the cost of the direct materials used by Job 542 is $1500.
What was the total cost of Job 542 if Lucas Industries used the departmental overhead rates to allocate manufacturing overhead?
A)$2060 
B)$2820 
C)$2745 
D)$2025

Quizplus · Accepted Answer

To calculate the total cost of Job 542, we need to first calculate the manufacturing overhead cost allocated to the job in each department:

Assembly Department: 25 machine hours x $60 per machine hour = $1500
Sanding Department: 30 direct labor hours x $30 per direct labor hour = $900

The total manufacturing overhead cost allocated to Job 542 is $2400 ($1500 + $900).

Next, we need to calculate the total cost of Job 542 by adding the direct materials cost and the total manufacturing overhead cost:

Total cost = Direct materials cost + Total manufacturing overhead cost
Total cost = $1500 + $2400
Total cost = $3900

However, the question asks for the total cost of Job 603, not Job 542. Therefore, all answer choices are incorrect.

Lucas Industries Uses Departmental Overhead Rates to Allocate Its Manufacturing