Question

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below. Mixing Baking Direct labor hours 403,000 DLH 83,000 DLH Machine hours 803,000 MH 803,000 MH Overhead costs $ 604,500 $ 403,000 Compute Aztec's departmental overhead rate for the mixing department based on direct labor hours.

Multiple Choice

$0.75 per DLH.

$0.50 per DLH.

$1.50 per DLH.

$4.86 per DLH.

$2.07 per DLH.

Answer 1

Answer

• Mixing Department overhead cost = $ 604500
• Mixing Department DLHs = 403,000
• Departmental overhead rate = $ 604500 / 403000
  = $ 1.50 per DLH
• Correct Answer = Option #3: $ 1.50 per DLH