Question

At the beginning of the year, Glaser Company estimated the following: Assembly Department Testing Department Total Overhead $702,000 $786,240 $1,488,240 Direct labor hours 77,000 95,480 172,480 Machine hours 95,500 68,760 164,260 Glaser uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows: Assembly Department Testing Department Total Overhead $91,260 $102,211 $193,471 Direct labor hours 10,010 12,412 22,422 Machine hours 12,415 8,939 21,354 Required: Calculate the predetermined overhead rates for the assembly and testing departments.

Answer 1

Answer:

Assebly rate: $ 9.12 per labor hour

Testing rate: $11.43 per machine hour

Explanation:

Assembly Department Testing Department Total

                               $702,000 $786,240 $1,488,240

Direct labor hours        77,000     95,480     172,480

Machine hours             95,500     68,760     164,260

$\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate$

Assembly rate:

702,000 / 77,000 = 9,11688

Testing rate

786,240 / 68,760 = 11,4347