Complete Question:
S4-2 (similar to) Question Help. Sally's Furniture uses departmental overhead rates (rather than a plantwide overhead rate) to allocate its manufacturing overhead to jobs. The company's two production departments have the following departmental overhead rates: Cutting Department: $8 per machine hour Finishing Department: $14 per direct labor hour Job 112112 used the following direct labor hours and machine hours in the two manufacturing departments:
Resources used for Job 112112
Cutting Finishing
Direct Labor Hours 6 10
Machine Hours 6 7
Requirements:
1. How much manufacturing overhead should be allocated to Job 112112?
2. Assume that direct labor is paid at a rate of $23 per hour and Job 112112 used $2,400 of direct materials. What was the total manufacturing cost of Job 112112? 1. How much manufacturing overhead should be allocated to Job 112112? Calculate the total manufacturing overhead for the job by using a formula for each department's overhead amount and then adding both amounts together. First determine the formula and overhead for the Cutting Department.
Answer:
Sally's Furniture
1. Manufacturing overhead allocated to Job 112112:
Cutting department = Machine hour rate x machine hours
= $8 x 6 = $48
Finishing department = Direct labor hour rate x direct labor hours
= $14 x 10 = $140
Total manufacturing overhead = $188 ($48 + 140)
2. Total manufacturing cost of Job 112112:
Direct materials = $2,400
Direct labor = 368 (16 x $23)
Overhead = 188
Total cost = $2,956
Explanation:
a) Data:
Departmental overhead rates:
Cutting Department: $8 per machine hour
Finishing Department: $14 per direct labor hour
b) Job Costing is a costing method that allocates the costs of resources for manufacturing goods and services according to the costs consumed by each job. Each job becomes a cost center for accumulating costs instead of the process involved in the production. The system helps management to keep track of the costs of each job.
