The following information is available pertaining to the Production Division of Clarkson Enterprises: $\begin{array} { l c c c } & \text { Assembly Dept. } & \text { Finishing Dept. } & \text { Total } \ \text { Overhead costs } & \$ 7,500 & \$ 22,500 & \$ 30,000 \ \text { Direct labor hours } & 7,500 & 2,500 & 10,000 \ \text { Machine hours } & 2,500 & 7,500 & 10,000 \end{array}$
Production information pertaining to Job 4X5:
$\begin{array}{lrrr}
&\text { Assembly Dept. }& \text { Finishing Dept. } &\text { Total }\
\text { Prime costs } & \$ 1,250 & \$ 0 & \$ 1,250 \
\text { Direct labor hours } & 250 & 0 & 250 \
\text { Machine hours } & 0 & 0 & 0\
\text { Units produced }&500&0&500
\end{array}$
What are the total overhead costs assigned to Job 4X5, assuming the Assembly and Finishing Departments use direct labor hours and machine hours for their bases, respectively?
A)$62.50
B)$250.00
C)$750.00
D)$1,500.00

Question

Quizplus · Accepted Answer

The overhead rate for the Assembly Dept. is $1 per direct labor hour ($7,500/7,500 hours), and for the Finishing Dept., it is $3 per machine hour ($22,500/7,500 hours). For Job 4X5, the Assembly Dept. uses 250 direct labor hours, resulting in $250 (250 hours x $1/hour) in overhead costs. The Finishing Dept. uses 0 machine hours, resulting in $0 overhead costs. Total overhead costs for Job 4X5 are $250.

The Following Information Is Available Pertaining to the Production Division