A service business expects to incur overheads totalling $20,000 next month. The total direct labour time worked is 1,600 hours and total machine hours are 1,000. During next month, the business expects to do just two large jobs. Information concerning each job is as follows: $$\begin{array} { l l l }
& \text { Job1 } & \text { Job2 } \
\text { Direct Labour hours } & 700 & 900 \
\text { Machine hours } & 700 & 300
\end{array}$$ REQUIRED:
a)Calculate the overhead recovery rate for the month using direct labour hours.
b)Compute how much of the month's overhead will be charged to each job.

Question

A service business expects to incur overheads totalling $20,000 next month. The total direct labour time worked is 1,600 hours and total machine hours are 1,000. During next month, the business expects to do just two large jobs. Information concerning each job is as follows: $$\begin{array} { l l l } 
& \text { Job1 } & \text { Job2 } \
\text { Direct Labour hours } & 700 & 900 \
\text { Machine hours } & 700 & 300
\end{array}$$ REQUIRED:
a)Calculate the overhead recovery rate for the month using direct labour hours.
b)Compute how much of the month's overhead will be charged to each job.

Quizplus · Accepted Answer

The Answer of A service business expects to incur overheads totalling $20,000 next month. The total direct labour time worked is 1,600 hours and total machine hours are 1,000. During next month, the business expects to do just two large jobs. Information concerning each job is as follows: $$\begin{array} { l l l } 
& \text { Job1 } & \text { Job2 } \
\text { Direct Labour hours } & 700 & 900 \
\text { Machine hours } & 700 & 300
\end{array}$$ REQUIRED:
a)Calculate the overhead recovery rate for the month using direct labour hours.
b)Compute how much of the month's overhead will be charged to each job.

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