Question

Mag Mag applies manufacturing overhead to each job using departmental overhead rates. The​ company's operations are divided into two​ departments: Katie and Huckleberry. The Katie department uses a departmental overhead rate of​ $52 per machine​ hour, while the Huckleberry department uses a departmental overhead rate of​ $28 per direct labor hour. Job JJ used the following machine hours in the two​ departments:

	Katie	Huckleberry
Machine hours	66	55

Direct labor costs incurred for Job JJ in the Katie Department and the Huckleberry Department were​ $160 and​ $384, respectively. The wage rate in each department is​$20 per direct labor hour.How much total manufacturing overhead would be applied to Job JJ using the departmental overhead​ rates?

Answer 1

• Requirement: Total Manufacturing Overhead applied to Job JJ
• Manufacturing Overhead applied = (No. of machine hours x Overhead rate per machine hour for Katie Department) + (No. of direct labor hours x Overhead rate per DLHs for Huckleberry department)
• No. of direct labor hours used in Huckleberry department = Direct labor cost / Wage rate
  = $ 384 / $ 20
  = 19.2 direct labor hours.
• Answer calculation:

Manufacturing Overhead applied = (No. of machine hours x Overhead rate per machine hour for Katie Department) + (No. of direct labor hours x Overhead rate per DLHs for Huckleberry department)

= (66 machine hours x $ 52) + (19.2 direct labor hours x $ 28)
= 3432 + 537.6
= $ 3,969.60 or $ 3,970