Indeed Company Makes a Product Using Two Departments: Department 1

question 69

Essay

Indeed Company makes a product using two departments: Department 1 and Department 2. Information on these departments is as follows: $$\begin{array} { l r r } & \text { Department 1 } & \text { Department 2 } \\\text { Direct labour hours } & 10,000 & 90,000 \\\text { Machine hours } & 40,000 & 10,000 \\\text { Manufacturing overhead cost } & \$ 240,000 & \$ 180,000\end{array}$$ A. Calculate the department manufacturing overhead rate for each department. Use machine hours as the base in Department 1 and direct labour hours as the base in Department 2.
B. A job has prime cost of $270. It uses 10 machine hours in Department 1 and 15 direct labour hours in Department 2. Calculate the total product cost for the job.
C. Recalculate the department manufacturing overhead rate for each department. Use direct labour hours as the base in Department 1 and machine hours as the base in Department 2.
D. A job has prime cost of $270. It uses 10 direct labour hours in Department 1 and 15 machine hours in Department 2. Using the rates calculated in part C, calculate the total product cost for the job.

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