X Company has two production departments, 1 and 2. Listed below are budgeted inf
ID: 2424490 • Letter: X
Question
X Company has two production departments, 1 and 2. Listed below are budgeted information for the two departments, and actual information for one of its products, Product X:
3. Using a plantwide allocation system with direct labor hours as the cost driver, what was the allocation to Product X [round overhead rates to the nearest cent]?
4. Using a departmental allocation system with direct labor hours as the cost driver in Department 1 and machine hours as the cost driver in Department 2, what was the allocation to Product X [round overhead rates to the nearest cent]?
Please show your work and give answer for number 3 and 4
Department 1 All Products Product X Overhead $4,500,000 - Direct labor $600,000 $10,800 Direct labor hours 40,000 720 Machine hours 100,000 1,020 Units produced 59,000 630 Department 2 Overhead $2,200,000 - Direct labor $600,000 $3,840 Direct labor hours 40,000 256 Machine hours 130,000 850 Units produced 39,000 630Explanation / Answer
Plantwide allocation system
Overhead in Dept 1
4500000
Overhead in Dept 2
2200000
Total Overhead (A)
6700000
Direct labour hour in Dept 1
40000
Direct labour hour in Dept 2
40000
Total Labour hour (B)
80000
Plant wide overhead rate ( C) = (A)/(B)
83.75
Direct labour hour in Dept 1 (Product X)
720
Direct labour hour in Dept 2 (Product X)
256
Total direct labour hour in Dept (Product X) (D)
976
Total Overhead to Product X ( C)*(D)
81740
Departmental allocation system
Overhead in Dept 1 (1)
4500000
Overhead in Dept 2 (2)
2200000
Direct labour hour in Dept 1 (3)
40000
Machine hour in Dept 2 (4)
130000
Overhead rate in dept 1 (6)=(1)/(3)
112.50
Overhead rate in dept 2 (7)=(2)/(4)
16.92
Direct labour hour in Dept 1 (Product X) (8)
720
Machine hour in Dept 2 (Product X) (9)
850
Overhead Dept 1 (Product X) (8)*(6)
81000
overhead Dept 2 (Product X) (9)*(7)
14,385
Plantwide allocation system
Overhead in Dept 1
4500000
Overhead in Dept 2
2200000
Total Overhead (A)
6700000
Direct labour hour in Dept 1
40000
Direct labour hour in Dept 2
40000
Total Labour hour (B)
80000
Plant wide overhead rate ( C) = (A)/(B)
83.75
Direct labour hour in Dept 1 (Product X)
720
Direct labour hour in Dept 2 (Product X)
256
Total direct labour hour in Dept (Product X) (D)
976
Total Overhead to Product X ( C)*(D)
81740
Departmental allocation system
Overhead in Dept 1 (1)
4500000
Overhead in Dept 2 (2)
2200000
Direct labour hour in Dept 1 (3)
40000
Machine hour in Dept 2 (4)
130000
Overhead rate in dept 1 (6)=(1)/(3)
112.50
Overhead rate in dept 2 (7)=(2)/(4)
16.92
Direct labour hour in Dept 1 (Product X) (8)
720
Machine hour in Dept 2 (Product X) (9)
850
Overhead Dept 1 (Product X) (8)*(6)
81000
overhead Dept 2 (Product X) (9)*(7)
14,385
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