Question
Cost accumulation in two departments Rio Valde Co. uses a normal cost, job order costing system. In the Mixing Department, overhead is applied using
Cost accumulation in two departments Rio Valde Co. uses a normal cost, job order costing system. In the Mixing Department, overhead is applied using machine hours; in Paving, overhead is applied using direct labor hours. In December of Year One, the company estimated the following data for its two departments for Year Two: Mixing Department Paving Department Direct labor hours 24,000 Machine hours 120,000 Budgeted overhead cost $960,000 56,000 24,000 $1,400,000 a. Compute the predetermined OH rate for each department of Rio Valde. Mixing Department $ Predetermined OH Rate 8 per MH 25 per DLH Paving Department s b. Job # 220 was started and completed during March of Year Two. The job cost sheet shows the following information: Direct material Direct labor cost Direct labor hours Machine hours Mixing Department Paving Department $45,200 $2,500 48 580 $6,800 $8,100 680 88 Compute the overhead applied to Job # 220 for each department and in total. Applied Overhead to Job #220 Mixing Department $ Paving Department Total $ 4,640 17,000 - 21,640 C c. The president of Rio Valde suggested that, for simplicity, a single predetermined overhead rate be computed using machine hours. How much overhead would have been applied to Job # 220 if that single rate had been used? Note: Round your final answer to the nearest whole dollar. $ 9,774 x
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