I think i have done this correctly but have one question. In part A for cost driver for finishing dept, it asks for % of direct labor cost. Would it be 20.78/735 for 2.82% ? Thanks for helping me on this part. If you see any mistakes please let me know.
ting Mackenzie Consulting computes the cost of each consulting engagement by adding a portion of firmwide overhead costs to the labor cost of the consultants on the engagement. The overhead costs are assigned to each consulting engagement using a cost driver rate based on consultant labor costs. Mackenzie Consulting's overhead costs are $5 million per year, and total consultant labor cost is estimated at $2.5 million per year. Required (a) What is Mackenzie Consulting's cost driver rate? (b) If the consultant labor cost on an engagement is $25,000, what cost will Mackenzie Consult- ing compute as the total cost of the consulting engagement? -30 Job order costing and cost driver rates KAM Company uses a job order costing system at its local plant. The plant has a machining department and a finishing department. The company uses machine hours to allocate machining department overhead costs to jobs and uses direct labor cost to allocate finishing department overhead costs to jobs. Cost and practical capacity estimates for the current year are as follows: Cambridge Business Publishers MACHINING DEPARTMENT FINISHING DEPARTMENT 102 $320,000 1,400 15,400 $323,400 $450,000 14,000 3,500 $ 63,000 Manufacturing overhead costs. Machine hours Direct labor hours. Direct labor cost Chapter 4 Accumulating and Assigning Costs froducts (L03, 4, 6) 4-31 Single rate versus departmental rates Northern Wood Products has two production depart- ments: cutting and assembly. The company has been using a plantwide cost driver rate computer by dividino nlantida Auerhand enthu. tatal lantawide direct labor hours. The estimates for Direct materials cost... Direct labor cost. Direct labor hours. Machine hours Determine the total cost charged to job 103. Required (a) Determine the cost driver rate for each department. (b) Cost records for job 103 show the following: MACHINING DEPARTMENT FINISHING DEPARTMENT $9,000 $ 126 7 50 $1,200 $ 735 35 6 Activity 4-30 Requirement a cost driver rate for the machine department 450,000/14,000 = $32.14/machine hour 320,000/15,400 = $20.78 or % of direct labor cost Cost driver rate for the finishing department Requirement b Direct materials cost Direct labor cost Manufacturing overhead (rounded) Machining $9,000 $126 50*32.14= $1.607 $10.733 Finishing $1,200 $735 20.78*35 $727 $2,662 Total $10,200 $861 $2.334 Total costs of Job 103 (rounded) $13,395 Requirement a Activity 5-20 Design $189.000 Installation $396,000 Maintenance $336,000 Resource Costs