Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labour hours in the Assembly Department. The following estimates were provided at the beginning of the current year:

Required:
a. Compute the manufacturing indirect cost allocation rate for each department.
b. Compute the total cost of Job 846.
c. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.

Question

Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labour hours in the Assembly Department. The following estimates were provided at the beginning of the current year:
  
Required:
a. Compute the manufacturing indirect cost allocation rate for each department.
b. Compute the total cost of Job 846.
c. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.

Quizplus · Accepted Answer

The Answer of Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labour hours in the Assembly Department. The following estimates were provided at the beginning of the current year:
  
Required:
a. Compute the manufacturing indirect cost allocation rate for each department.
b. Compute the total cost of Job 846.
c. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.

Hill Manufacturing Uses Departmental Cost Driver Rates to Apply Manufacturing