Compute the manufacturing overhead allocation rate Cost Accounting
Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20X5, the following estimates were provided for the coming year:
| Machining | Assembly | |
| Direct labor-hours | 10,000 dlh | 90,000 dlh |
| Machine-hours | 100,000 mh | 5,000 mh |
| Direct labor cost | $ 80,000 | $720,000 |
| Manufacturing overhead costs | $250,000 | $360,000 |
The accounting records of the company show the following data for Job #846:
| Machining | Assembly | |
| Direct labor-hours | 50 dlh | 120 dlh |
| Machine-hours | 170 mh | 10 mh |
| Direct material cost | $2,700 | $1,600 |
| Direct labor cost | $ 400 | $ 900 |
Required:
a. Compute the manufacturing overhead allocation rate for each department.
b. Compute the total cost of Job #846.
c. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.
