Bauer Manufacturing uses departmental cost driver rates to a

Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to proudcts. Mnaufacturing overhead costs are allocated on the the bases of Macine hours in the Machining Department on the bases of direct labor hours. In the Assembly Department. At the beginning of 2018, the following estimates were provided for the coming year:

                                                                                           Machining                           Assembly

Direct labor - hours                                                              40,000                                   40,000

Machine - hours                                                                   50,000                                   20,000

Direct labor costs                                                              $500,000                                 $900,000

Manufacturing overhead costs                                         $280,000                                 $360,000

The accounting records of the company show the following data for Job #316

                                                                                               Machine                                     Assembly

Direct labor - hours                                                                   120                                                 65

Machine - hours                                                                          50                                                   5

Direct material cost                                                                 $425                                             $175

Direct labor cost                                                                      $275                                             $300

WHat are the total manufacturing costs for Job #316

Which of the following are correct? (Please show ALL calculations)

A. $2,040

B. $1,960

C. $1,175

D. $1,440

Thanks.

Solution

Calculate overhead rate :

Machine department = 280000/50000 = 5.6 per machine hour

Assembly department = 360000/40000 = 9 per labour hour

Calculate total manufacturing costs for Job #316 :

so answer is a) $2,040