Question

You are a management internee at the Gadgets Company. The company operates with two Divisions, Xen and Yen and produces designer toy cars. For Division Xen, the management applies overhead costs on the basis of direct labor cost, and for Division Yen, it applies overhead costs on the basis of machine-hours. The company completed Job FIN-E in late 2017. The company’s books reveal the following additional information:

            Budgeted Amounts             Division Xen            Division Yen

            Labor cost (Direct)               $283 000                   $268 000

            Manufacturing overhead      $328 000                   $285 000

            Machine-hours                         61 300 mh            51 400 mh

            Actual data for Job FIN-E Division Xen                 Division Yen

            Direct materials used                        $21 100                     $26 300

            Labor cost (Direct)                           $21 500                     $24 400

            Machine-hours                                   9500 mh                   6300 mh

Required: Your supervisor has asked you to work out the following, showing all your calculations (round off to two decimal places):

a. The manufacturing overhead rate (budgeted) for Division Xen.

b. The manufacturing overhead rate (budgeted) for Division Yen.

c. The total overhead cost (budgeted) allocated to Job FIN-E.

d. The unit cost for job FIN-E if the Job required Gadgets to produce 1065 designer toy cars.

Answer 1