Question

2. Megan Company has two departments, X and Y. Overhead is applied based on direct-labor hours in Department X and machine hours in Department Y. The following additional information is available:

BUDGETED AMOUNTS
	Department X	Department Y
Direct-Labor Hours	18,000	16,500
Machine Hours	51,000	40,000
Factory Overhead	$225,000	$180,000

Actual Data for Job #10

	Department X	Department Y
Direct materials	$10,000	$16,000
Direct-labor cost	$11,000	$14,000
Machine hours	5,000	3,000
Direct-labor hours	1,100	1,400

Required:

1. Compute the budgeted factory-overhead rate (i.e., the $ rate per activity base hour, etc.) for Department X.

2. Compute the budgeted factory-overhead rate (i.e., the $ rate per activity base hour, etc.) for Department Y.

3. What is the total overhead cost of Job #10?

4. What is the total cost of Job #10?

5. If Job 10 consists of 50 units of product, what is the unit cost of this job?

Answer 1

	Department-X	Department-Y
Factory overhead	$           225,000	$     180,000
Cost driver	Direct labor hours	Machine hours
Cost driver	18000	40000
Factory overhead rate=	=225000/18000	=180000/40000
Factory overhead rate=	$               12.50	$           4.50
Job 10 data
	Department-X	Department-Y
Labor hours	1100
Machine hours		3000
Overhead recovery rate	$               12.50	$           4.50
Overhead cost	=1100*12.5	=3000*4.5
Overhead cost	$        13,750.00	$ 13,500.00
Job 10 data
	Department-X	Department-Y	Total
Direct Material	$             10,000	$       16,000	$ 26,000
Direct labor	$             11,000	$       14,000	$ 25,000
Factory overheads	$             13,750	$       13,500	$ 27,250
Total cost			$ 78,250
Job 10
Total cost	$             78,250
No of units	50
Cost per unit	=78250/50
Cost per unit	$               1,565