Question

Deloria Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department’s predetermined overhead rate is based on machine-hours and the Assembly Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

	Forming		Assembly
Machine-hours		19,000		15,000
Direct labor-hours		4,000		8,000
Total fixed manufacturing overhead cost	$	129,200	$	77,600
Variable manufacturing overhead per machine-hour	$	1.60
Variable manufacturing overhead per direct labor-hour			$	3.00

During the current month the company started and finished Job T288. The following data were recorded for this job:

Job T288:	Forming		Assembly
Machine-hours		80		10
Direct labor-hours		30		40
Direct materials	$	730	$	380
Direct labor cost	$	900	$	1,200

The total amount of overhead applied in both departments to Job T288 is closest to:

Answer 1

OH rate:
Forming based on MH
Total Fixed overheads			129200
Divide: MH			19000
Fixed OH per MH				6.8
Variable oh per MH				1.6
OH rate per MH				8.4
Assembly based n DLH
Total fixed OH			77600
Divide: DLH			8000
Fixed OH rate per DLH'				9.7
Variable OH rate per DLH				3
Oh rate per DLH				12.7
Overheads applied to Job T288:
Forming deptt (80 MH @ 8.40)				672
Assembly deptt (40 DLH @ 12.70)				508
Total Overheads applied				1180