Problem 2:

The Lofton 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:

Machining Department Finishing Department

Manufacturing overhead costs $234,000 $209,000

Machine hours 9,000 1,200

Direct labor hours 2,200 13,700

Direct labor cost $97,000 $380,000

Requirements

?(a) Determine the cost driver rate for each department.

?(b) Cost records for job 101 show the? following:

Machining Department Finishing Department

Direct materials cost $8,600 $1,100

Direct labor cost $220 $760

Direct labor hours 9 38

Machine hours 90 8

Determine the total cost charged to job 101.

Requirement? (a) Determine the cost driver rate for each department.

Identify the? formula, then calculate the cost driver rate for each department. ?(Enter your answers as whole? numbers.)

________/_______ = __________ Cost driver rate