Question

1. Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20X3, the following estimates were provided for the coming year:

	Machining	Assembly
Direct labor-hours	30,000	60,000
Machine-hours	80,000	20,000
Direct labor cost	$500,000	$900,000
Manufacturing overhead costs	$420,000	$240,000

           The accounting records of the company show the following data for Job #316:

	Machining	Assembly
Direct labor-hours	120	70
Machine-hours	60	5
Direct material cost	$300	$200
Direct labor cost	$100	$400

What are the total manufacturing costs of Job #316?
a. $880
b. $1,000
c. $715
d. $1,595
e. None of the above

Answer 1

--Correct Answer = Option 'D' $ 1595

Job #316
	Machining	Assembly	Total
Direct material cost	$300	$200	$500
Direct Labor cost	$100	$400	$500
Overhead allocated [see working]	$315	$280	$595
Total Cost	$715	$880	$1,595 Answer

--Working

		Machining	Assembly
A	Overhead cost	$420,000	$240,000
	Allocation base	MHs	DLHs
B	Total Allocation base	80000	60000
C = A/B	Overhead rate	$5.25	$4.00
D	Allocation base for Job # 316	60	70
E= C x D	Overhead allocated	$315	$280