Bond 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 $20 per machine hour,while the Sanding Department uses a departmental overhead rate of $15 per direct labour hour.Job 542 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 542 is $1,200.
How much manufacturing overhead would be allocated to Job 542 using the departmental overhead rates?

Question

Bond 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 $20 per machine hour,while the Sanding Department uses a departmental overhead rate of $15 per direct labour hour.Job 542 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 542 is $1,200.
How much manufacturing overhead would be allocated to Job 542 using the departmental overhead rates?

Quizplus · Accepted Answer

To calculate the manufacturing overhead allocated to Job 542 using departmental overhead rates, we need to calculate the overhead allocated by each department separately.

Assembly Department allocation:

Overhead allocated to Job 542 = Assembly departmental overhead rate x machine hours used by Job 542 in the Assembly department
= $20 x 2
= $40

Sanding Department allocation:

Overhead allocated to Job 542 = Sanding departmental overhead rate x direct labour hours used by Job 542 in the Sanding department
= $15 x 4
= $60

Total manufacturing overhead allocated to Job 542 = Overhead allocated by Assembly department + Overhead allocated by Sanding department
= $40 + $60
= $100

Therefore, the correct answer is C) $225.

Bond Industries Uses Departmental Overhead Rates to Allocate Its Manufacturing