Question
The GonzalezGonzalez Company uses a job order costing system at its plant in Green Bay, Wisconsin. The plant has a machining department and a finishing
The
GonzalezGonzalez
Company uses a job order costing system at its plant in Green Bay, Wisconsin. The plant has a machining department and a finishing department. The company uses two cost driver rates for allocating manufacturing overhead costs to job orders: one on the basis of machine hours for allocating machining department overhead costs and the other on the basis of direct labor cost for allocating the finishing department overhead costs. Estimates for the current year follow:
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Machining Department Finishing Department Manufacturing overhead costs $ 500,000 $ 400,000 Machine hours 20,000 2,000 Direct labor hours 5,000 22,000 Direct labor cost $ 150,000 $ 500,000
Requirements
(a) | Determine the two departmental cost driver rates. |
(b) | Last month, cost records for job 511 show the following: LOADING... (Click the icon to view the cost records.)Determine the total costs charged to job 511. |
(c) | Explain why GonzalezGonzalez Company uses two different cost driver rates in its job costing system. |
Machining Department Finishing Department Direct materials cost $ 12,000 $ 2,000 Direct labor cost $ 300 $ 1,200 Direct labor hours 10 50 Machine hours 80 8
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