The following information is available pertaining to the Production Division:
$\begin{array}{lrrr}&\text { Mixing Dept. }&\text { Finishing Dept. }&\text { Total }\
\text { Overhead costs } & \$ 7,500 & \$ 22,500 & \$ 30,000 \
\text { Direct labour hours } & 7,500 & 2,500 & 10,000 \
\text { Machine hours } & 2,500 & 7,500 & 10,000
\end{array}$

$\text { Production information pertaining to Job } 4 \text { X5: }$
$\begin{array}{lrrr}&\text { Mixing Dept. }&\text { Finishing Dept. }&\text { Total }\
\text { Prime costs } & \$ 1,250 & \$ 0 & \$ 1,250 \
\text { Direct labour hours } & 250 & 0 & 250 \
\text { Machine hours } & 1 & 0 & 1 \
\text { Units produced } & 500 & 0 & 500
\end{array}$
-Refer to the figure.Departmental overhead notes for the Mixing Department are based on direct labour hours,while departmental overhead rates for the Finishing Department are based on machine hours.Based on departmental overhead rates,what is the cost of Job 4X5?

Question

The following information is available pertaining to the Production Division:
$\begin{array}{lrrr}&\text { Mixing Dept. }&\text { Finishing Dept. }&\text { Total }\
\text { Overhead costs } & \$ 7,500 & \$ 22,500 & \$ 30,000 \
\text { Direct labour hours } & 7,500 & 2,500 & 10,000 \
\text { Machine hours } & 2,500 & 7,500 & 10,000
\end{array}$

$\text { Production information pertaining to Job } 4 \text { X5: }$
$\begin{array}{lrrr}&\text { Mixing Dept. }&\text { Finishing Dept. }&\text { Total }\
\text { Prime costs } & \$ 1,250 & \$ 0 & \$ 1,250 \
\text { Direct labour hours } & 250 & 0 & 250 \
\text { Machine hours } & 1 & 0 & 1 \
\text { Units produced } & 500 & 0 & 500
\end{array}$
-Refer to the figure.Departmental overhead notes for the Mixing Department are based on direct labour hours,while departmental overhead rates for the Finishing Department are based on machine hours.Based on departmental overhead rates,what is the cost of Job 4X5?

Quizplus · Accepted Answer

The overhead rate for the Mixing Department is calculated based on direct labor hours: $\$7,500 / 7,500 hours = \$1 per direct labor hour$. For Job 4X5, the direct labor hours in the Mixing Department are 250, so the overhead cost is $250 hours * \$1/hour = \$250$. Since there are no direct labor hours or machine hours in the Finishing Department for Job 4X5, no overhead from the Finishing Department is allocated to Job 4X5. Therefore, the total cost of Job 4X5 is the sum of its prime costs (\$1,250) and the overhead allocated from the Mixing Department (\$250), totaling \$1,500. However, since this option is not available, it appears there was a mistake in my calculation or interpretation of the options provided. The correct approach to calculate the overhead costs based on the given departmental bases and rates should lead to the correct total cost for Job 4X5, considering both its prime costs and any allocated overhead costs.

The Following Information Is Available Pertaining to the Production Division