Australia Industries Pty Ltd manufactures its products through two production departments. Materials are shaped and cut in the machining department and then fitted together in the assembly department. Up to now, Australia Industries Pty Ltd has used a plant-wide application rat to apply overhead using direct labour hours.

particular order required the following operating hours:

Required: Calculate the total amount of overhead charged to production where:

(1) a plant-wide rate is used.

(2) a different application rate is used for each department.

Budget estimates Machining Assembly Total Overhead costs $18,000 $10,000 $28,000 Activity levels Machine hours 6,000 1,000 7,000 Direct labour hours 1,000 4,000 5,000 particular order required the following operating hours: Machining Assembly Total Machine hours 5 1 6 Direct labour hours 1 2 3 Required: Calculate the total amount of overhead charged to production where: i.a plant-wide rate is used. (5 Marks) ii.a different application rate is used for each department