Lucas Industries Uses Departmental Overhead Rates to Allocate Its Manufacturing

question 55

Multiple Choice

Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $60 per machine hour, while the Sanding Department uses a departmental overhead rate of $30 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments: The cost for direct labor is $35 per direct labor hour and the cost of the direct materials used by Job 542 is $1500.
What was the total cost of Job 542 if Lucas Industries used the departmental overhead rates to allocate manufacturing overhead?

• A)$2060
• B)$2820
• C)$2745
• D)$2025

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Definitions:

Market Supply And Demand

The economic model that explains the interaction between the supply of goods and services and the demand for them, determining their market prices.

Marginal Cost

A rise in the cumulative expenses associated with the production of an extra unit.

Economic Rent

Extra income earned by a factor of production due to its limited supply or unique properties, over and above its opportunity cost.

Output Tax

A tax levied on the quantity of production or output generated by a company, as opposed to income or profit.