Question Help rate of $2.40 with drect labor The Oiver Company manufactures prod

Question

Question Help rate of $2.40 with drect labor The Oiver Company manufactures products In two departments: Mixing and Packaging The company was allocating manufacturing overhead using a single piantwide hours as the alocation base The company has refined its allocation system by separating manufachuring overhead costs into two cost pools-one for each estimated hours, and the estmatod drect labor hours for the year are 190,000. The depatment. The estimated costs for the Mxing Department, $494,000, will be allocated based on direct labor costs for the Packaging Department, $158.,250, will be ailocated based on machine hours, and the estimated machine hours for the year are 45,000. In Ocsober, ne company incurred 25,000 direct abor hours in the Mixing Department and 8,000 machine hours in the Packaging Department Raad the tournment Requiremant 1. Compute the predelermined overhead alocation ratos. Round to two decimal paces Begin by selecting the formula to calculane the predetermined overhead (OH) allocation rate. Then enter the amourts to compuie the allocation rate for each department allocation rane Maxing Packaging ol Requirement 2. Determine the total amount of overhead alocated in Odtober. Begin by selecting the formula to alocate overhead costs Allocated mrg Compute the overhead alocated in October for each department and the total for both departments Maing Packaging Total

Explanation / Answer

SOLUTION

Requirement 1-

Predetermined OH allocation rate = Estimated overhead costs / Estimated qty of the allocation base

Mixing = $494,000 / 190,000 = $2.6

Packaging = $155,250 / 45,000 = $3.45

Requirement 2-

Allocated mfg. overhead costs= Predetermined OH allocation rate * Actual qty of the allocation base used

Amount ($) Mixing ($2.6 *25,000) 65,000 Packaging ($3.45 * 8,000) 27,600 Total 92,600

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