A company produces surgical equipment that goes through threes processes, 1A1, 2B2, and 3C3, before they are complete.Expected costs and activities for the three departments are shown below.All departments have departmental overhead rates based on direct labor hours.Therefore, the overhead rate for each department is $5 per direct labor hour.
$$\begin{array} { l c c c }
& \text { Department } & \text { Department } & \text { Department } \
& 1 \mathrm { Al } & 2 \mathrm { B2 } & 3 \mathrm { C3 } \
\text { Machine hours } & 15,000 \mathrm { MH } & 25,000 \mathrm { MH } & 20,000 \mathrm { MH } \
\text { Direct labor hours } & 22,830 \mathrm { DLH } & 10,650 \mathrm { DLH } & 29,200 \mathrm { DLH } \
\text { Overhead costs } & \$ 114,150 & \$ 213,000 & \$ 73,000
\end{array}$$

Question

A company produces surgical equipment that goes through threes processes, 1A1, 2B2, and 3C3, before they are complete.Expected costs and activities for the three departments are shown below.All departments have departmental overhead rates based on direct labor hours.Therefore, the overhead rate for each department is $5 per direct labor hour.
 $$\begin{array} { l c c c } 
& \text { Department } & \text { Department } & \text { Department } \
& 1 \mathrm { Al } & 2 \mathrm { B2 } & 3 \mathrm { C3 } \
\text { Machine hours } & 15,000 \mathrm { MH } & 25,000 \mathrm { MH } & 20,000 \mathrm { MH } \
\text { Direct labor hours } & 22,830 \mathrm { DLH } & 10,650 \mathrm { DLH } & 29,200 \mathrm { DLH } \
\text { Overhead costs } & \$ 114,150 & \$ 213,000 & \$ 73,000
\end{array}$$

Quizplus · Accepted Answer

The overhead rate for each department is calculated by dividing the total overhead costs by the total direct labor hours for that department. The given overhead rate of $5 per direct labor hour does not match the calculated rates for each department based on the provided data.

A Company Produces Surgical Equipment That Goes Through Threes Processes