Question

X Company has two production departments, A and B. At the start of 2019, the following budgeted cost information was available:

	Overhead
Department A	$520,000
Department B	$190,000

The following activity information is for X Company's only two jobs, Job 11 and Job 22, both of which were started and completed during the year:

	Job 11	Job 22
Direct labor hours in Department A	1,750	912
Direct labor hours in Department B	214	1,114
Total direct labor hours	1,964	2,026
Machine hours in Department A	2,120	2,520
Machine hours in Department B	1,780	1,520
Total machine hours	3,900	4,040

Using a departmental allocation system with direct labor hours as the cost driver in Department A and machine hours as the cost driver in Department B, what was the allocation to Job 22 (round overhead rate(s) to two decimal places)?

Answer 1

OH rate of Deptt A (based o DLH)
Total overheads		520000
Divide: DLH of A		2662	(1750+912)
OH rate of Deptt A (based o DLH)	195.34	per DLH
OH rate of deptt B (based on MH)
Total Overheads		1,90,000
Divide: MH of B		3300	(1780+1520)
OH rate of deptt B (based on MH)	57.58	per MH
Overheads allocated to Job 22:
OH of A (1750 DLH @ 195.34)	341845
OH f B (1520 MH @ 57.58)	87521.6
Overheads allocated to Job 22:	429366.6
Answer is $429,367