39) Sector's Machine Works manufactures custom equipment. Sector's Machine Works currently uses a plant-wide overhead rate, based on direct labour hours, to allocate its $2,000,000 of manufacturing overhead to individual jobs.
Sector's plant completed Jobs 550 and 555 on May 15. Both jobs incurred a total of 7 DL hours throughout the entire production process. Job 550 incurred 3 MH in the Machining Department and 6 DL hours in the Assembly Department (the other DL hour occurred in the Machining Department). Job 555 incurred 4 MH in the Machining Department and 5 DL hours in the Assembly Department (the other two DL hours occurred in the Machining Department).
Requirements
1. Compute the plant-wide overhead rate, assuming Garvey expects to incur 40,000 total DL hours during the year.
2. How much manufacturing overhead would be allocated to each job if Sector uses the plant wide rate?
40) Sector's Machine Works manufactures custom equipment. Sector's Machine Works currently uses a plant-wide overhead rate, based on direct labour hours, to allocate its $2,000,000 of manufacturing overhead to individual jobs. However, Franco Sector, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $1,400,000 of MOH while the Assembly Department incurs $600,000 of MOH. Franco has identified machine hours (MH) as the primary MOH cost driver in the Machining Department and direct labour (DL) hours as the primary cost driver in the 550 and 555 on May 15. Both jobs incurred a total of 7 DL hours throughout the entire production process. Job 550 incurred 3 MH in the Machining Department and 6 DL hours in the Assembly Department (the other DL hour occurred in the Machining Department). Job 555 incurred 4 MH in the Machining Department and 5 DL hours in the Assembly Department (the other two DL hours occurred in the Machining Department).
Requirements
1. Compute departmental overhead rates, assuming Sector expects to incur 25,000 MH in the Machining Department and 30,000 DL hours in the Finishing Department during the year.
2. Using the departmental rates how much manufacturing overhead would be allocated to Job 550 and to Job 555.
41) Murphy's Machine Works manufactures custom equipment. Sector's Machine Works currently uses a plant-wide overhead rate, based on direct labour hours, to allocate its $2,500,000 of manufacturing overhead to individual jobs.
Murphy's plant completed Jobs 600 and 601 on July 15. Both jobs incurred a total of 9 DL hours throughout the entire production process. Job 550 incurred 5 MH in the Machining Department and 6 DL hours in the Assembly Department (the other DL hour occurred in the Machining Department). Job 555 incurred 8 MH in the Machining Department and 7 DL hours in the Assembly Department (the other two DL hours occurred in the Machining Department).
Requirements
1. Compute the plant-wide overhead rate, assuming Murphy expects to incur 50,000 total DL hours during the year.
2. How much manufacturing overhead would be allocated to each job if Murphy uses the plant wide rate?