obillard Products manufactures its products in two separate departments: Machini
ID: 2558808 • Letter: O
Question
obillard Products manufactures its products in two separate departments: Machining and Assembly. Total manufacturing overhead costs for the year are budgeted at $1,100,000. Of this amount, the Machining Department 22,000 direct labor hours (8,000 in the Machining Department and 14,000 in the Assembly Department) during the year Robillard Products currently uses a plantwide overhead rate based on direct labor hours to allocate overhead. However, the company is considering refining its overhead allocation system by using departmental overhead 00. The company estimates that it will incur 10,000 machine hours( e Machining Departmenty ar ates. The Machining Department would allocate its overhead using machine hours (MH),but the Assembly Department would allocate its overhead using direct labor (DL) hours. The following chart shows the machine hours (MH) and direct labor (DL) hours incurred by Jobs 500 and 501 in each production department: (Click the icon to view the additional information ) Read the requirementsExplanation / Answer
Solution:
Part 1 – Plantwide Overhead Rate
Estimated Total Overhead Costs
/
Estimated Direct Labor Hours
=
Predetermine overhead rate
$1,100,000
/
22,000
=
$50per DLH
Part 2 --- Departmental Overhead Rate
Departmental Overhead Rate
Estimated Departmental Overhead Costs
/
Estimated Allocation Base
=
Departmental Overhead Rate
Machining
$680,000
/
10,000 Machine Hours
=
$68 per MH
Assembly
$420,000
/
22000 Direct Labor Hour
=
$19.10 Per DLH
Part 3 – Chart is missing to answer this part.
Part 4 --- Pls provide chart to answer this part
Estimated Total Overhead Costs
/
Estimated Direct Labor Hours
=
Predetermine overhead rate
$1,100,000
/
22,000
=
$50per DLH
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