Brisbane,Inc.,a leading manufacturer of car spare parts,divided its manufacturing process into two Departments - Production and Packing.The estimated overhead costs for the Production and Packing departments amounted to $14,000,000 and $20,000,000,respectively.The company produces two types of parts - Part 1 and Part 2.The total estimated labor hours for the year were 40,000,and estimated machine hours were 35,000.The Production department is mechanized,whereas the Packing department is labor oriented.Calculate the amount of manufacturing overhead costs allocated to Part 1.
$$\begin{array} { | l | l | l | }
\hline & \text { Production } & \text { Packing } \
\hline & \text { Machine hours } & \text { Labor hours } \
\hline \text { Part 1 } & 10,000 & 30,000 \
\hline \text { Part 2 } & 25,000 & 10,000 \
\hline & \underline { 35,000 } & 40,000 \
\hline
\end{array}$$

Question

Brisbane,Inc.,a leading manufacturer of car spare parts,divided its manufacturing process into two Departments - Production and Packing.The estimated overhead costs for the Production and Packing departments amounted to $14,000,000 and $20,000,000,respectively.The company produces two types of parts - Part 1 and Part 2.The total estimated labor hours for the year were 40,000,and estimated machine hours were 35,000.The Production department is mechanized,whereas the Packing department is labor oriented.Calculate the amount of manufacturing overhead costs allocated to Part 1.
 $$\begin{array} { | l | l | l | } 
\hline & \text { Production } & \text { Packing } \
\hline & \text { Machine hours } & \text { Labor hours } \
\hline \text { Part 1 } & 10,000 & 30,000 \
\hline \text { Part 2 } & 25,000 & 10,000 \
\hline & \underline { 35,000 } & 40,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer is Calculation of departmental predetermined overhead allocation rates:

\begin{array} { l l c } & ext { Productian } & ext { Packing } \ ext { Estimated overhead cost } & \$ 14,000,000 & \$ 20,000,000 \ ext { Estimated machine hours } & 35,000 & \ ext { Estimated labor hours } & & 40,000 \ ext { Predetermined overhead allocation rate } & \$ 400 & \$ 500\end{array}

Part 1

\begin{array}{ll} ext { Manufacturing overhead }- ext { Production: } 10,000 ext { machine hours } imes \$ 400 & \$ 4,000,000 \ ext { Manufacturing overhead }- ext { Packing: } 30,000 ext { labor hours } imes \$ 500 & \underline{15,000,000} \ ext { Total manufacturing overhead allocated: } & \underline{19,000,000}\end{array}