Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of
$35
per machine hour, while the Sanding Department uses a departmental overhead rate of
$20
per direct labor hour. Job 542 used the following direct labor hours and machine hours in the two departments:
Actual results |
Assembly Department |
Sanding Department |
Direct labor hours used |
7 |
3 |
Machine hours used |
10 |
5 |
The cost for direct labor is
$30
per direct labor hour and the cost of the direct materials used by Job 542 is
$1,300.
What was the total cost of Job 542 if Lucas Industries used the departmental overhead rates to allocate manufacturing overhead?
A.
$1,630
B.
$1,930
C.
$2,010
D.
$ 1,600
Answer: C. $2,010
Explanation:
Calculation of total cost of Job 542 if Lucas Industries used the departmental overhead rates to allocate manufacturing overhead:
Particulars | Job 542 |
Direct Material | $1,300 |
Direct labor (10 hours ![]() |
300 |
Assembly Department Overhead (10 ![]() |
350 |
Standard Department Overhead(3 ![]() |
60 |
Total | $2,010 |
For Assembly department Direct labor hours used and for Sanding Department Machine hours are used for Overhead allocation.
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