Crane Fabrication allocates manufacturing overhead to each job using departmental overhead rates. Crane's operations are divided into a metal casting department and a metal finishing department. The casting department uses a departmental overhead rate of $51 per machine hour, while the finishing department uses a departmental overhead rate of $25 per direct labor hour. Job A216 used the following direct labor hours and machine hours in the two departments: Actual results Casting Department Finishing Department Direct labor hours used 8 14 Machine hours used 3 6 The cost for direct labor is $42 per direct labor hour and the cost of the direct materials used by Job A216 is $2,000. What was the total cost of Job A216 if Crane Fabrication used the departmental overhead rates to allocate manufacturing overhead?

Question

Ramiro Fowler

Business

10 February, 00:21

Crane Fabrication allocates manufacturing overhead to each job using departmental overhead rates. Crane's operations are divided into a metal casting department and a metal finishing department. The casting department uses a departmental overhead rate of $51 per machine hour, while the finishing department uses a departmental overhead rate of $25 per direct labor hour. Job A216 used the following direct labor hours and machine hours in the two departments: Actual results Casting Department Finishing Department Direct labor hours used 8 14 Machine hours used 3 6 The cost for direct labor is $42 per direct labor hour and the cost of the direct materials used by Job A216 is $2,000. What was the total cost of Job A216 if Crane Fabrication used the departmental overhead rates to allocate manufacturing overhead?

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Answers (1)

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Cale Salazar · Answer 1

Total Cost 3,682

Explanation:

We must use for each department their overhead rate.

Then, we will add the overhead applied in the two department.

JOB A216

Casting overhead Machine hours 3

51 per machine hour casting department

Applied overhead

3 x 51 = 408

Finishing overhead Labour hours 14

25 direct labour finishing department

Applied overhead

14 x 25 = 350

Total overhead 350 Casting + 408 Finishing = 758

Next, we move to the other two cost components.

Direct Labor (8 casting + 14 finishing) * 42 = 22*42=924

Direct Materials 2,000

Total Cost 3,682