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14 June, 09:08

Furniture Company manufactures tables. It has two manufacturing departments: Department A and B. The company uses a budgeted overhead rate for applying overhead to production. In March, the two production departments had budgeted allocation bases of 4,000 machine-hours in Department A and 8,000 direct manufacturing labor-hours in Department B. The budgeted manufacturing overheads for the month were $57,500 and $62,500, respectively. For Job A, the actual costs incurred in the two departments were as follows: Department A Department B Direct materials purchased $4,000 $1,750 Direct materials used 3,250 1,350 Direct manufacturing labor 5,250 5,350 Direct labor hours 100 300 Machine hours 800 200 What is the total cost of Job A?

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  1. 14 June, 09:38
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    The total cost of Job A is $29,044

    Explanation:

    The computation of the total cost is shown below:

    = Direct materials used for Department A + Direct materials used for Department B + Direct manufacturing labor for Department A + Direct manufacturing labor for Department B + Applied overhead for Department A + Applied overhead for Department B

    where,

    Applied overhead for Department A = (Budgeted manufacturing overheads : machine-hours) * Department A machine hours

    = ($57,500 : 4,000 machine-hours) * 800 machine-hours

    = $11,500

    Applied overhead for Department B = (Budgeted manufacturing overheads : Direct labor hours) * Department B Direct labor hours

    = ($62,500 : 8,000 Direct labor hours) * 300 Direct labor hours

    = $2,344

    The other items values would remain the same

    Now put these values to the above formula

    So, the value would equal to

    = $3,250 + $1,350 + $5,250 + $5,350 + $11,500 + $2,344

    = $29,044
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