Question 1

The Braveheart Corporation uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: cutting and painting. The Cutting Department uses a departmental overhead rate of $12 per machine hour, while the Painting Department uses a departmental overhead rate of $17 per direct labour hour. Job 422 used the following direct labour hours and machine hours in the two departments:

Actual results Casting department painting department

Direct labour hours used 12 10

Machine hours used 14 12

The cost for direct labour is $20 per direct labour hour and the cost of the direct materials used by Job 422 is $800.

Required: What was the total cost of Job 422 if the Braveheart Corporation used the departmental overhead rates to allocate manufacturing overhead?

Question 2

Red Stone Manufacturing, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows:

Activity cost pool total cost total activity

Assembly $552,000 $ 30,000- machine-hours

inspection $324,700 $8,500- inspection-hours

packaging $49,450 $2,300 orders

Red Stone Manufacturing makes 400 of its product B34 a year, which requires a total of 52 machine hours, 15 inspection hours, and 20 orders. Product B34 requires $75.50 in direct materials per unit and $68.80 in direct labour per unit. Product B34 sells for $180 per unit.

Required:

A.Calculate the cost pool activity rate for each of the three activities.

B.How much manufacturing overhead would be allocated to Product B34 in total?

C.What is the product margin in total for Product B34?