ABC Industries uses departmental overhead rates to allocate its manufacturing ov

Question

ABC Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two department: Assembly, and Sanding. The Assembly department uses a departmental overhead rate of $35 per machine hour. The Sanding department uses a departmental overhead rate of $20 per direct labor hour. Job 603 used the following Direct Labor Hours, and Machine Hours in the two departments: Actual Results Assembly Department Sanding Department Direct Labor Hours Used 8 5 Machine Hours Used 10 7 The cost of direct labor is $30 per direct labor hour, and the cost of direct materials used by Job 603 is $1,400. How much manufacturing overhead would be allocated to Job 603 using departmental overhead rates?

Explanation / Answer

Manufacturing overhead would be allocated to Job 603 = (35*10)+(20*5)= $450

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