Mitchell's Softball Gloves Company estimated the following at the beginning of the year:
Mitchell uses departmental overhead rates.In the assembly department, direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:

Mitchell decides to continue using departmental overhead rates.If a job spends 4 hours in assembly and 3 hours in testing, what is the amount of overhead charged to the job?
A) $22
B) $20
C) $28
D) $50.54
E) None of these.

Question

Mitchell's Softball Gloves Company estimated the following at the beginning of the year:  
 Mitchell uses departmental overhead rates.In the assembly department, direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:

Mitchell decides to continue using departmental overhead rates.If a job spends 4 hours in assembly and 3 hours in testing, what is the amount of overhead charged to the job?
A) $22 
B) $20 
C) $28 
D) $50.54 
E) None of these.

Quizplus · Accepted Answer

Assembly: $570,000 / 142,500 = $4 per direct labor hour
Testing: $130,000 / 65,000 = $2 per machine hour
($4 × 4 hrs) + ($2 × 3 hrs) = $22

Mitchell's Softball Gloves Company Estimated the Following at the Beginning