Rafter Manufacturing has the following budgeted data for its two production departments.
Budgeted Data Assembly Finishing
________________________________________________________
Overhead cost $1,200,000 $800,000
Direct labor hours 12,000 direct labor hours 20,000 DLHRS
Machine hours 4,000 machine hours 16,000 MHRs
Allocate overhead to a job that uses 80 direct labor hours in the assembly deplane uses 30 machines in the Finishing department.

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lo286907 lo286907 · Answer 1 · 2024-03-10T03:05:44+01:00

Answer total overhead allocation of 9,500

Explanation:

For the Assembly department:

Predetermined overhead rate = Budgeted overhead cost / Budgeted activity level

Predetermined overhead rate = $1,200,000 / 12,000 DLHRS

Predetermined overhead rate = $100 per DLHR

For the Finishing department:

Predetermined overhead rate = Budgeted overhead cost / Budgeted activity level

Predetermined overhead rate = $800,000 / 16,000 MHRs

Predetermined overhead rate = $50 per MHR

Now we can allocate overhead costs to the job using the predetermined overhead rates:

For the Assembly department:

Overhead allocated = Predetermined overhead rate * Actual activity level

Overhead allocated = $100 per DLHR * 80 DLHRS

Overhead allocated = $8,000

For the Finishing department:

Overhead allocated = Predetermined overhead rate * Actual activity level

Overhead allocated = $50 per MHR * 30 MHRs

Overhead allocated = $1,500

So, the total overhead allocated to the job is $8,000 for Assembly and $1,500 for Finishing, resulting in a total overhead allocation of $9,500.