Sector's Machine Works Manufactures Custom Equipment

question 177

Essay

Sector's Machine Works manufactures custom equipment. Sector's Machine Works currently uses a plantwide overhead rate, based on direct labour hours, to allocate its $2,000,000 of manufacturing overhead to individual jobs.
Sector's plant completed Jobs 550 and 555 on May 15. Both jobs incurred a total of 7 DL hours throughout the entire production process. Job 550 incurred 3 MH in the Machining Department and 6 DL hours in the Assembly Department (the other DL hour occurred in the Machining Department). Job 555 incurred 4 MH in the Machining Department and 5 DL hours in the Assembly Department (the other two DL hours occurred in the Machining Department).
Requirements
1. Compute the plantwide overhead rate, assuming Garvey expects to incur 40,000 total DL hours during the year.
2. How much manufacturing overhead would be allocated to each job if Sector uses the plant wide rate?

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Definitions:

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