Question

Rafner Manufacturing identified the following budgeted data in its two production departments.

Assembly Finishing Manufacturing overhead costs $ 1,257,300 $ 660,000 Direct labor hours 12,600 DLH 20,600 DLH Machine hours 6,600 MH 16,600 MH

Required:

What are the company's departmental overhead rates if the assembly department assigns overhead based on direct labor hours and the finishing department assigns overhead based on machine hours?

Answer 1

Answer:

$99.78; $39.76

Explanation:

Assembly:

Manufacturing overhead costs = $1,257,300

Direct labor hours = 12,600 DLH

Machine hours = 6,600

Departmental Overhead rate for Assembly:

= Estimated Overhead Cost ÷ Estimated Direct labor hours

= $1,257,300 ÷ 12,600

= $99.78

Finishing:

Manufacturing overhead costs = $660,000

Direct labor hours = 20,600 DLH

Machine hours = 16,600

Departmental Overhead rate for Finishing:

= Estimated Overhead Cost ÷ Estimated Machine hours

= $660,000 ÷ 16,600

= $39.76