X Company has two production departments, A and B. At the start of the year, the

Question

X Company has two production departments, A and B. At the start of the year, the following budgeted information is available:

Department A
Overhead $7,700,000
Direct labor hours 50,000
Machine hours 110,000
Department B
Overhead $2,200,000
Direct labor hours 50,000
Machine hours 130,000

The following information is for two specific jobs, Job 111 and Job 222, that were completed during the year:

Department A Department B
Job 111
Direct labor hours 836 233
Machine hours 1,040 890
Job 222
Direct labor hours 402 597
Machine hours 1,240 710

Using a plantwide allocation system with machine hours as the cost driver, what is the allocation to Job 222 (round overhead rates to the nearest cent and your answer to the nearest dollar)?
A: $26,385 B: $38,258 C: $55,474 D: $80,438 E: $116,634 F: $169,120

Using a departmental allocation system with machine hours as the cost driver in Department A and direct labor hours as the cost driver in Department B, what is the allocation to Job 222 (round overhead rates to the nearest cent and your answer to the nearest dollar)?

Explanation / Answer

D: $80,438

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