Question

# Bob’s Electronics Inc. manufactures high-tech screens for computers. In June, the two production departments had budgeted...

Bob’s Electronics Inc. manufactures high-tech screens for computers. In June, the two production departments had budgeted allocation bases of 13,000 machine hours in Department 1 and 7,100 direct manufacturing labour hours in Department 2. The budgeted manufacturing overheads for the month were \$55,900 and \$41,890, respectively. For Job 101, the actual costs incurred in the two departments were as follows:

 Department 1 Department 2 Direct materials purchased on account \$66,000 \$106,500 Direct materials used 12,500 9,100 Direct manufacturing labour 32,500 32,200 Indirect manufacturing labour 6,600 5,400 Indirect materials used 4,500 2,850 Lease on equipment 9,750 2,250 Utilities 600 750

Job 101 incurred 1,600 machine hours in Department 1 and 900 manufacturing labour hours in Department 2. The company uses a budgeted departmental overhead rate for applying overhead to production.

1. What is the budgeted indirect cost allocation rate for Department 1?

1. What is the budgeted indirect cost allocation rate for Department 2?

1. What is the total cost assigned to Job 101 based on normal costing?

#### Homework Answers

Answer #1
 Department 1 Department 2 Budgeted indirect cost allocation rate for             = Budgeted Overheads / Budgeted MH / DLH \$ 4.30 ( \$ 55,900 / 13,000 MH) \$ 5.90 ( \$ 41,890 / 7,100 DLH ) Particulars Department-1 Department -2 Direct Material Used \$ 12,500 \$ 9,100 Direct Labour \$ 32,500 \$ 32,200 Applied Manufacturing Overhead \$ 6,880 ( 1,600 MH x \$ 4.30 ) \$ 5,310 ( 900 DLH x \$ 5.90 ) Total Cost Assigned \$ 51,880 \$ 46,610
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