Bond Industries uses departmental overhead rates to allocate its manufacturing o

Question

Bond Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $20 per machine hour, while the Sanding Department uses a departmental overhead rate of $15 per direct labor hour. Job 542 used the following direct labor hours and machine hours in the two departments:

The cost for direct labor is $25 per direct labor hour and the cost of the direct materials used by Job 542 is $1,200.

What was the total cost of Job 542 if Bond Industries used the departmental overhead rates to allocate manufacturing overhead?

Select one:

a. $1,500

b. $1,600

c. $1,425

d. $1,375

Actual results Assembly Department Sanding Department Direct labor hours used 4 3 Machine hours used 9 5

Explanation / Answer

Answer:b. $1600

Labor ($25*4+$25*3) 175 Material 1200 Overhead Assembly Dept. (9MH*$20) 180 Sanding Dept. (3DLH*$15) 45 Total cost 1600

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