Question

The Oswell Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of $2.20 with direct labor hours as the allocation base. The company has refined its allocation system by separating manufacturing overhead costs into two cost pools —one for each department. The estimated costs for the Mixing Department, $425,000, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 170,000. The estimated costs for the Packaging Department, $210,000, will be allocated based on machine hours, and the estimated machine hours for the year are 60,000. In October, the company incurred 40,000 direct labor hours in the Mixing Department and 11,000 machine hours in the Packaging Department.

Requirement 1. Compute the predetermined overhead allocation rates. Round to two decimal places.

Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each department.

Requirement 2. Determine the total amount of overhead allocated in October Begin by selecting the formula to allocate overhead costs. Compute the overhead allocated in October for each department and the total for both departments.

Answer 1

Statementshowing Computations
Paticulars	Mixing Department
estimated costs for the Mixing​ Department	425,000.00
estimated direct labor hours	170,000.00
predetermined overhead allocation rates = 425,000/170,000	2.50
	Packaging​ Department
estimated costs for the Packaging​ Department,	210,000.00
estimated machine hours	60,000.00
predetermined overhead allocation rates = 210,000/60,000	3.50
Requirement 2
	Mixing Department	Packaging​ Department
Predetermined Overhead Rate	2.50	3.50
Actual labour/ Machine hours	40,000.00	11,000.00
total amount of overhead allocated	100,000.00	38,500.00