Question

Quality Furniture uses departmental overhead rates (rather than a plantwide overhead rate) to allocate its manufacturing overhead to jobs. The company's two production departments have the following departmental overhead rates: Cutting Department: Finishing Department: $11 per machine hour $19 per direct labor hour Job 575 used the following direct labor hours and machine hours in the two manufacturing departments: (Click the icon to view the resources used for Job 575.) 1. How much manufacturing overhead should be allocated to Job 575? 2. Assume that direct labor is paid at a rate of $24 per hour and Job 575 used $2,800 of direct materials. What was the total manufacturing cost of Job 575? 1. How much manufacturing overhead should be allocated to Job 575? Calculate the total manufacturing overhead for the job by using a formula for each department's overhead amount and then adding both amounts together. First determine the formula and overhead for the Cutting Department. Cutting Department overhead Cutting Department machine hours Cutting Department direct labor hours Department overhead rate Finishing Department direct labor hours Finishing Department machine hours Plantwide overhead rate

Answer 1

Answer

• Requirement 1

Department Overhead rate	x	Machine hours used by Job 575	=	Cutting Department Overhead
$11	x	10	=	$110
Department Overhead rate	x	Direct labor hours used by Job 575	=	Finishing Department Overhead
$19	x	6	=	$114

Total Manufacturing Overhead allocated to Job 575
= $ 110 [cutting department] + $ 114 [Finishing Department]
= $ 224

• Requirement 2

Direct Material	$2,800
Direct Labor cost (8 DLHs x $ 24)	$192
Manufacturing Overhead (calculated in Requirement 1)	$224
Total man ufacturing cost of the job	$3,216	Answer