Use the information below to answer the following question(s):
Bond Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments, Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $20 per machine hour, while the Sanding Department uses a departmental overhead rate of $15 per direct labour hour. Job 542 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 542 is $1,200.
-How much manufacturing overhead would be allocated to Job 542 using the departmental overhead rates?
A) $125
B) $155
C) $225
D) $245

Question

Use the information below to answer the following question(s):
Bond Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments, Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $20 per machine hour, while the Sanding Department uses a departmental overhead rate of $15 per direct labour hour. Job 542 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 542 is $1,200.
-How much manufacturing overhead would be allocated to Job 542 using the departmental overhead rates?
A) $125 
B) $155 
C) $225 
D) $245

Quizplus · Accepted Answer

To calculate the manufacturing overhead allocated to Job 542 we need to calculate the overhead cost for each department and then add them together.

For Assembly: 
Overhead cost = Departmental overhead rate x Machine hours used 
Overhead cost = $20/hour x 15 hours = $300

For Sanding: 
Overhead cost = Departmental overhead rate x Direct labor hours used 
Overhead cost = $15/hour x 25 hours = $375

Total manufacturing overhead allocated to Job 542: 
$300 + $375 = $675

Therefore, the correct answer is option C: $225.

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