Leonard Industries Uses Departmental Overhead Rates to Allocate Its Manufacturing

question 84

Essay

Leonard Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs.The company has two departments: Building and Inspection.The Building Department uses a departmental overhead rate of $18 per machine hour,while the Inspection Department uses a departmental overhead rate of $15 per direct labour hour.Job 611 used the following direct labour hours and machine hours in the two departments:

The cost for direct labour is $25 per direct labour hour and the cost of the direct materials used by Job 611 is $1,500.
What was the total cost of Job 611 if Leonard Industries used the departmental overhead rates to allocate manufacturing overhead?

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Definitions:

Output

The quantity of products or services that a business, sector, or economic system generates.

Inputs

The resources used in the production of goods and services, such as labor, raw materials, and capital.

Production Function

An equation that describes the maximum output of a firm, given the quantity of inputs it uses, illustrating the relationship between inputs and outputs.

Isoquant

A curve representing all combinations of inputs that produce the same level of output in production theory.