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Homework answers / question archive / accounting final test 2 When overhead is allocated to every product using the same manufacturing overhead rate, this rate is called the departmental overhead rate
accounting final test 2
When overhead is allocated to every product using the same manufacturing overhead rate, this rate is called the departmental overhead rate.
To determine the amount of overhead allocated, the overhead rate is divided by the cost of the driver.
If a company's plantwide overhead rate is allocated based on direct labor hours, then each job will be allocated manufacturing overhead based on the total direct labor hours incurred on the job, regardless of the manufacturing department in which those hours were incurred.
The allocation base selected for each department should be the cost driver of the costs in the departmental overhead pool.
Direct labor hours would be the most appropriate cost allocation base for a Machining Department that uses machine robotics extensively.
Which of the following condition(s) favors using departmental overhead rates in place of a plantwide overhead rate?
It is easier to allocate indirect costs to the products that actually caused those costs if an ABC system is used rather than a traditional costing system.
Process costing is typically used for businesses that make unique goods in relatively small amounts
James 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 direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments:
Actual Results Assembly Departments Sanding Department
Direct labor hours used 8 5
Machine Hours Used 10 7
The cost for direct labor is $30 per direct labor hour and the cost of the direct materials used by job 603 is 1,400
