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Ravenna Inc. is a tire manufacturing located in western Manitoba. The company has made a concerted effort to keep better cost accounting records. In
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Ravenna Inc. is a tire manufacturing located in western Manitoba. The company has made a concerted effort to keep better cost accounting records. In doing so, Ravenna Inc. compiled the following information: Manufacturing Machine Hours Direct Labour: Direct Labour: Overhead Cost Hours Cost Actual $1,800,000 29,000 44,000 $250,000 Estimated $1,750,000 27,000 45,000 $300,000 In October, actual data consisted of 2,500 direct labour hours; $20,000 direct labour cost; and 2,150 machine hours. Required: (a) What is the allocation rate if Ravenna Inc. utilizes a normal costing system with machine hours as the allocation base? (3 marks) (b) Using your solution to part (a), calculate the allocated overhead for October. (2 marks)Step by Step Solution
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