Question

Aztec industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. next year's expected costs and activities are shown below.

Answer 1

Given the table showing next year's expected costs and activities below:

$\begin{tabular} {|C||C|C|} & Mixing & Baking\\[1ex] Direct labor hours&411,000 DLH&91,000 DLH\\ Maching hours&811,000 MH&811,000 MH\\[1ex] Overhead costs&\ 534,300&\ 411,000 \end{tabular}$

Pard A:

Aztec's departmental overhead rate for the mixing department based on direct labor hours is given by the mixing department's overhead cost divided by the mixing department's direct labor hours.

Thus, departmental overhead rate for the mixing department based on direct labor hours is given by:

$\frac{\ 534,300}{411,000\ DLH} =\bold{\ 1.30\ per\ DLH}$



Part B:

Aztec's departmental overhead rate for the baking department based on direct labor hours is given by the baking department's overhead cost divided by the baking department's direct labor hours.

Thus, departmental overhead rate for the baking department based on direct labor hours is given by:

$\frac{\ 411,000}{91,000\ DLH} =\bold{\ 4.52\ per\ DLH}$



Part 3:

Aztec's departmental overhead rate for the baking department based on machine hours is given by the baking department's overhead cost divided by the baking department's machine hours.

Thus, departmental overhead rate for the baking department based on machine hours is given by:

$\frac{\ 411,000}{811,000\ MH} =\bold{\ 0.51\ per\ MH}$