Question

The Oliver Company manufactures products in two​ departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of

$2.25

with direct labor hours as the allocation base. The company has refined its allocation system by separating manufacturing overhead costs into two cost

poolslong dash—one

for each department. The estimated costs for the Mixing​ Department,

$461,250​,

will be allocated based on direct labor​ hours, and the estimated direct labor hours for the year are

205,000.

The estimated costs for the Packaging​ Department,

$170,500​,

will be allocated based on machine​ hours, and the estimated machine hours for the year are

55,000.

In

October​,

the company incurred

5,000

direct labor hours in the Mixing Department and

3,000

machine hours in the Packaging Department.

Read the requirements

1.	Compute the predetermined overhead allocation rates. Round to two decimal places.
2.	Determine the total amount of overhead allocated in October.

.

Requirement 1. Compute the predetermined overhead allocation rates. Round to two decimal places.

Begin by selecting the formula to calculate the predetermined overhead​ (OH) allocation rate. Then enter the amounts to compute the allocation rate for each department.

						Predetermined OH
		/			=	allocation rate

Mixing

/

=

Packaging

/

=

Requirement 2. Determine the total amount of overhead allocated in

October.

Begin by selecting the formula to allocate overhead costs.

						Allocated mfg.
		x			=	overhead costs

Compute the overhead allocated in

October

for each department and the total for both departments.

Mixing
Packaging
Total

Answer 1

	1)	Predetermined Overhead Rates
	Mixing Department = $461250 / 205000 Direct Labor Hours
			=$2.25 Per direct labor hours
	Packaging Department = $170500/ 55000 Direct Machine Hours
			=$3.1 per direct machine hour
	2) Allocated Manufacturing Overhead
	Mixing Department = $2.25 Per direct labor hour * 5000 labor hours
			=$11250
	Packaging Department = $3.1 per machine hour * 3000 machine hours
			=$9300
	Total	=11250+9300
		20550