Question
Delphi used to make auto parts (spark plugs) in Flint. They had two overhead cost pools: machining and packaging. If there is one plant-wide
Delphi used to make auto parts (spark plugs) in Flint. They had two overhead cost pools: machining and packaging. If there is one plant-wide rate, it is allocated based on direct labor hours. If there are departmental rates, then machining overhead was allocated on machine-hours. Packaging overhead was allocated on direct labor hours. Budget Overhead Machine hours Direct labor hours Direct labor dollars Actual results Actual overhead Machine hours Direct labor hours Direct labor dollars Job 299 used: Machine hours Machining dept. $1,400,000 20,000 1,000 $30,500 Packaging dept. $200,000 1,000 10,000 $310,000 Total $1,600,000 21,000 11,000 $340,500 $1,320,000 $210,000 $1,530,000 19,500 1,050 20,550 11,200 12,150 $350,100 950 $30,100 Machining dept. 610 machine hours $320,000 Assembly dept. 95 machine hours Direct labor hours Direct labor dollars 32 $990 195 $6,200 1. If there is one overhead rate, based on direct labor hours, then What is the overhead application rate: How much overhead is applied to Job 299 $ per direct labor hours? 2. If departmental overhead rates are used, what is the overhead application rate for: Machining dept. $_ _per machine hr. Assembly dept. $ How much total overhead is applied to this job? _direct labor hour 3. Assume that one overhead rate (based on direct labor dollars) is used for the entire plant. At the end of the year is overhead over-applied or under-applied, and by how much? (over/under) circle one
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