Question

amel Corporation has two production departments and uses departmental predetermined overhead rates based on direct labor cost to apply manufacturing overhead to jobs. The predetermined overhead rates for the year are $2 per direct labor dollar for Department A and $0.50 per direct labor dollar for Department B. The following data are available for Job 628, which was started and completed during the year: Dept. A Dept. B $60,000 $25,000 Direct materials Direct labor Manufacturing overhead ??? $60,000 $80,000 ??? The total manufacturing cost assigned to Job 628 was: $195,000 O $270,000 $295.000 $305,000 None of the above LE

Answer 1

Your required answer is option C i.e. $295,000

Explanation:

Direct Material Direct Labor Manufacturing Overhead Manufacturing Cost Dept. A Dept. B Total $60,000 $25,000 $85,000 $40,000 $60,000 $100,000 $80,000 $30,000 $110,000 $180,000 $115,000 $295,000

Direct Labor of Dept. A = Manufacturing Overhead/Predetermined overhead rate of Dept. A

Direct Labor of Dept. A = $80,000/$2

Direct Labor of Dept. A = $40,000

Manufacturing Overhead of Dept. B = Direct Labor X Predetermined overhead rate of Dept. B

Manufacturing Overhead of Dept. B = $60,000 X $0.5

Manufacturing Overhead of Dept. B = $30,000

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