question archive Bronzit Company estimated the following at the beginning of the year:   Assembly Department Testing Department Total Overhead $700,000   $100,000   $800,000   Direct Labor Hours 150,500 hrs

Bronzit Company estimated the following at the beginning of the year:   Assembly Department Testing Department Total Overhead $700,000   $100,000   $800,000   Direct Labor Hours 150,500 hrs

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Bronzit Company estimated the following at the beginning of the year:

  Assembly Department Testing Department Total
Overhead $700,000   $100,000   $800,000  
Direct Labor Hours 150,500 hrs.   40,500 hrs.   191,000 hrs.  
Machine Hours 37,000 hrs.   72,000 hrs.   109,000 hrs.  


Bronzit uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead. Machine hours are used to apply overhead in the testing department.

Actual data for the month of May is as follows:

  Assembly Department Testing Department Total
Overhead $50,000   $11,000   $61,000  
Direct Labor Hours 20,000 hrs.   2,500 hrs.   22,500 hrs.  
Machine Hours 3,500 hrs.   14,000 hrs.   17,500 hrs.  


If Bronzit uses a plant wide overhead rate based on direct labor hours, instead of departmental rates, what is the predetermined overhead rate rounded to the nearest cent?

a.$4.50 per direct labor hour

b.$0.33 per direct labor hour

c.$8.65 per direct labor hour

d.$5 per direct labor hour

e.$4.19 per direct labor hour

Bronzit decides to continue using departmental overhead rates. What are the predetermined rates for the Assembly and Testing departments respectively? (Note: Round to two decimal places.)

a.Assembly: $5.25 per direct labor hour; Testing: $7.33 per machine hour

b.Assembly: $4.65 per direct labor hour; Testing: $1.39 per machine hour

c.Assembly: $2.23 per direct labor hour; Testing: $6.15 per direct labor hour

d.Assembly: $5.12 per machine hour; Testing: $7.22 per machine hour

e.None of these choices are correct

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Answer:

           
1) predtermined overhead rate based on direct labor hours
  800,000/191,000        
  4.188481675        
  option e $4.19 per direct labor hours    
             
             
             
2) departmental overhead rates      
             
  Assembly = 700,000/150,500= 4.651162791  
        4.65per direct labor hour
             
             
  Testing       = 100,000/72,000= 1.388888889  
        1.39 per machine hour
             
             
  option b is the answer      
             
             
         

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