Deloria Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: During the current month the company started and finished Job T288. The following data were recorded for this job:
The amount of overhead applied in the Assembly Department to Job T288 is closest to: (Round your intermediate calculations to 2 decimal places.)

Question

Deloria Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:  During the current month the company started and finished Job T288. The following data were recorded for this job:
 The amount of overhead applied in the Assembly Department to Job T288 is closest to: (Round your intermediate calculations to 2 decimal places.)

Quizplus · Accepted Answer

Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)
= $77,600 + ($3.00 per direct labor-hour × 8,000 direct labor-hours)
= $77,600 + $24,000 = $101,600
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $101,600 ÷ 8,000 direct labor-hours = $12.70 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $12.70 per direct labor-hour × 40 direct labor-hours = $508

Deloria Corporation Has Two Production Departments, Forming and Assembly