The following information is available pertaining to the Production Division of
ID: 2395196 • Letter: T
Question
The following information is available pertaining to the Production Division of Clarkson Enterprises: Assembly Dept. Finishing Dept. Total Overhead costs $10,000 $30,000 $40,000 Direct labor hours 8,000 2,000 10,000 Machine hours 3,000 5,000 8,000 Production information pertaining to Job 4X5: Assembly Dept. Finishing Dept. Total Prime costs $2,380 $-0- $2,380 Direct labor hours 280 -0- 280 Machine hours -0- -0- -0- Units produced 500 -0- 500
1. Refer to Figure 5-7. What is the plant wide overhead rate based on direct labor hours?
2. Refer to Figure 5-7. Using the plant wide overhead rate based on direct labor hours what is the cost of Job 4X5?
3. Refer to Figure 5-7. What is the overhead rate for the Finishing Department based on machine hours?
4. Refer to Figure 5-7. What are the total overhead costs assigned to Job 4X5, assuming the Assembly and Finishing Departments use direct labor hours and machine hours for their bases, respectively?
Explanation / Answer
(1) Plantwide O/H rate based on direct labour hrs = Total OH/Total Labour hrs
= 40000/10000 = $ 4 per labour hr
(2) Cost of Job 4X5 = Prime cost + O/H cost
= 2380 + (4 * 280) = $ 3500
(3) Finishing Dept O/H rate based on machine hrs = Finishing OH/Total machine hrs in finishing dept
=30000/5000 = 6
(4) O/H assigned to job 4X5:-
Assembly Dept (10000/8000) * 280
350
Finishing Dept (30000/5000) * 0
0
350
Assembly Dept (10000/8000) * 280
350
Finishing Dept (30000/5000) * 0
0
350
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