Question

Sportway Inc. produces high-quality tennis racquets and golf clubs using a patented forming process and high-quality hand-finishing Products move through two production departments: Forming and Finishing. The company uses departmental overhead rates to allocate overhead costs. Overhead is allocated based on machine-hours in Forming and direct labour cost in Finishing. Information related to costs for last year is provided below: Tennis Racquets 5,900 $ 5.40 Golf Clubs 9,350 $ 4.30 Annual production and sales (units) Direct materials cost per unit Direct labour cost per unit: Forming Department Finishing Department Machine hours per unit: Forming Department Finishing Department $ 5.00 $ 7.50 $ 4.50 8.00 0.25 0.00 0.25 8.50 In addition, the firm budgets manufacturing overhead at $49.250 in the Forming Department and $55,500 in the Finishing Department. Required: 1. Determine the overhead application rate for each departmentRound your answers to 2 decimal places.) Forming Finishing per MH per DLS

Answer 1

Computation of Overhead Application Rate for Forming Department

Total Machine Hour :- 3812.50 Hour ( 5900*0.25)+(9350*0.25)

Budgeted Manufacturing Overhead= $49250/ 3812.50= $12.92 per MH

Computation of Overhead Application Rate for Finishing Department

Total Labour Hour :- 4675 Hour ( 5900*0)+(9350*0.50)

Budgeted Manufacturing Overhead= $55500/ 4675= $11.87 per DLH