Jefferson Company Expects to Incur $450,000 in Manufacturing Overhead Costs

question 70

Essay

Jefferson Company expects to incur $450,000 in manufacturing overhead costs during the current year.Other budget information follows: $\begin{array}{|l|r|r|r|}\hline & \text { Department A } & \text { Department B } & \text { Department C } \\\hline \text { Direct labor hours } & 15,000 & 5,000 & 20,000 \\\hline \text { Machine hours } & 8,000 & 10,000 & 12,000 \\\hline\end{array}$ Required:
1)Use direct labor hours as the cost driver to compute the allocation rate.Determine the amount of budgeted overhead cost for each department.
2)Use machine hours as the cost driver to compute the allocation.Determine the amount of budgeted overhead cost for each department.
3)Assume that Department A manufactured a product that required 160 direct labor hours and 85 machine hours.If overhead is allocated based on direct labor hours,how much overhead would be allocated to this product?
4)Assume that Department A manufactured a product that required 160 direct labor hours and 85 machine hours.If overhead is allocated based on machine hours,how much overhead would be allocated to this product?

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Definitions:

Department 1

A nonspecific term that may refer to the first sector, division, or segment within an organization, requiring further context for a precise definition.

Applied Factory Overhead

The allocation of manufacturing overhead costs to actual production, based on a predetermined rate or formula.

Continuous Process

A production process that operates continuously without interruption to manufacture products or process materials in an unending flow.

Work In Process

The cost of unfinished goods in the manufacturing process at a given time, including labor, material, and overhead.