Q$1$: Allocate manufacturing overheads to departments. Specific overhead items should be

allocated on an individual basis when there is a logical basis for doing so$.$

Q$2$: Develop overhead application rates for three departments based on direct labor cost.

Q$3$: Complete the job cost sheets in Exhibits $2$ and $3$ to get the total costs for each job. Exhibit $2$

Department Material Cost Hours Labor Rates Labor Cost OH Applied Total

Forming $$301\mathrm{.}0010$ $$14\mathrm{.}00$ $$140\mathrm{.}00$ $$8\mathrm{.}36$ $$449\mathrm{.}36$

Finishing $$-15$ $$21\mathrm{.}00$ $$315\mathrm{.}00$ $$12\mathrm{.}08$ $$327\mathrm{.}08$

Assembly $$-10$ $$17\mathrm{.}50$ $$175\mathrm{.}00$ $$6\mathrm{.}93$ $$181\mathrm{.}93$

Total $$301\mathrm{.}00$ $$35\mathrm{.}00$ $$52\mathrm{.}50$ $$630\mathrm{.}00$ $$27\mathrm{.}36$ $$958\mathrm{.}36$ Exhibit $3$

Budgeted Total Forming Finishing Assembly

Direct Costs

Direct Labor $$210,000$ $$56,000$ $$84,000$ $$70,000$

Direct Materials $$140,000$ $$140,000$ $$-$ $$-$

Total Direct Costs $$350,000$ $$196,000$ $$84,000$ $$70,000$

Factory OH Costs

Supervision $$51,500$ $$17,167$ $$17,167$ $$17,167$

Supplies $$42,000$ $$-$ $$21,000$ $$21,000$

Power $$13,500$ $$8,100$ $$-$ $$5,400$

Rent $$36,000$ $$14,400$ $$10,800$ $$10,800$

Light and Heat $$12,000$ $$4,800$ $$3,600$ $$3,600$

Depreciation, machinery $$60,000$ $$36,000$ $$24,000$ $$-$

Insurance, machinery $$6,000$ $$3,600$ $$2,400$ $$-$

Repairs $$6,500$ $$3,900$ $$2,600$ $$-$

Total Factory OH Costs $$227,500$ $$87,967$ $$81,567$ $$57,967$

Administrative Costs

General Manager's Salary $$105,000\mathrm{.}0$ $$35,000\mathrm{.}0$ $$35,000\mathrm{.}0$ $$35,000\mathrm{.}0$

Shipping $$30,000\mathrm{.}0$ $$10,000\mathrm{.}0$ $$10,000\mathrm{.}0$ $$10,000\mathrm{.}0$

Rent $$18,000\mathrm{.}0$ $$6,000\mathrm{.}0$ $$6,000\mathrm{.}0$ $$6,000\mathrm{.}0$

Light and Heat $$6,000\mathrm{.}0$ $$2,000\mathrm{.}0$ $$2,000\mathrm{.}0$ $$2,000\mathrm{.}0$

Selling Expenses $$70,000\mathrm{.}0$ $$23,333\mathrm{.}3$ $$23,333\mathrm{.}3$ $$23,333\mathrm{.}3$

Administrative Expenses $$33,500\mathrm{.}0$ $$11,166\mathrm{.}7$ $$11,166\mathrm{.}7$ $$11,166\mathrm{.}7$

Total Administrative Expenses $$262,500\mathrm{.}0$ $$87,500\mathrm{.}0$ $$87,500\mathrm{.}0$ $$87,500\mathrm{.}0$

Overhead Application Rates Total Forming Finishing Assembly

Factory OH Application Rate $$1\mathrm{.}08$ $$0\mathrm{.}42$ $$0\mathrm{.}39$ $$0\mathrm{.}28$

Administrative OH Application Rate $$1\mathrm{.}25$ $$0\mathrm{.}42$ $$0\mathrm{.}42$ $$0\mathrm{.}42$

Total OH Application Rates $$2\mathrm{.}33$ $$0\mathrm{.}84$ $$0\mathrm{.}81$ $$0\mathrm{.}69$