LONCAPA Questions 4 and 5 uestions 4 and 5 refer to the foll

LON-CAPA Questions 4 and 5 uestions 4 and 5 refer to the following Information: Company has two production departments, A and B. At the start of the year, the following budgeted information is available Overhead Direct labor hours Machine hours $5,300,000 50,000 120,000 Overhead Direct labor hours Machine hours $1,800,000 60,000 120,000 The following information is for two specific jobs, Job 111 and Job 222, that were completed during the year: Department A Department B ob 111 Direct labor hours Machine hours 204 870 739 1,070 Job 222 Direct labor hours Machine hours 386 1,290 547 740 : Using a plantwide allocation system with direct labor hours as the cost driver, what is the allocation to Job 111 (round overhead rates to two decimal Submit Answer Tries 0/3 allocation to Job Using a departmental a??cation system with direct labor hours as the cost driver in Department A and machine hours as the cost driver in Department a, what is the round overhead rates to two decimal places)? Submit Answer Tries 0/3

Solution

4 Plantwide allocation using direct labor hours: Plantwide overhead rate=Total budgeted overhead for both departments/Total budgeted direct labor hours for both departments=(5300000+1800000)/(50000+60000)=$64.55 per direct labor hour Overhead allocated to Job 111=Total direct labor hours in both department*Plantwide overhead rate=(739+204)*64.55=$ 60870.65 5 Departmental overhead allocation system: Overhead allocation rate for department A=Budgeted overhead/Budgeted direct labor hours=5300000/50000=$106 per direct labor hour Overhead allocation rate for department B=Budgeted overhead/Budgeted Machine hours=1800000/120000=$15 per machine hour Overhead allocation to Job 111: Department A=Direct labor hours*overhead allocation rate for department A=739*106 78334 Department B=Machine hours*overhead allocation rate for department B=870*15 13050 Total overhead allocated to Job 111 91384