Use departmental overhead rates to allocate manufacturing overhead (Learning Objective:
Whitney Furniture uses departmental overhead rates (rather than a plantwide overhead rate) to allocate its manufacturing overhead to jobs. The company’s two production departments have the following departmental overhead rates:

Cutting Department: $9 per machine hour
Finishing Department: $18 per direct labor hour

Job 484 used the following direct labor hours and machine hours in the two manufacturing departments:

Job 484 Cutting Department Finishing Department
Direct Labor Hours 2 7
Machine Hours 8 4

1. How much manufacturing overhead should be allocated to Job 484?
2. Assume that direct labor is paid at a rate of $24 per hour and Job 484 used $2,400 of direct materials. What was the total manufacturing cost of Job 484?

The overhead allocated to job 484 is $198

Total manufacturing cost is $2814

Explanation:

Computation of job 484 overhead:

In cutting department overhead is  $9*8=$72      

In finishing department is $18*7              =$126

Total overhead                                           $198

If  direct labor is paid $24 per hour,the direct labor cost on job 484 is computed thus:

Total labor hours used by the job=2+7=9 hours

Total direct labor cost=9*$24=$216

Hence total manufacturing cost on the job is calculated as:

Direct materials  $2400

Direct labor cost  $216

Overhead              $198

                              $2814

1.  Manufacturing overhead charged to Job 484 is $ 198

2. Total manufacturing costs for job 484 is $2,814

Explanation:

Computation of overhead for Job 484

Cutting department based on machine hours

$ 9 per machine hour * 8 hours                                                          $ 72

Finishing department on Direct Labor hours

$ 18 per direct labor hour * 7 hours                                                   $ 126

Total overhead  for Job 484                                                               $ 198

Computation of total manufacturing costs for Job 484

Direct labor Total hours used

Cutting Department                         2 hours

Finishing department                       7 hours

Total hours - Direct Labor                9 hours

Hourly rate                                  $ 24 per hour

Total Direct Labor Cost    $ 24 * 9 hours                                          $     216

Direct Materials                                                                                   $ 2,400  

Manufacturing overhead applied                                                      $     198

Total manufacturing costs for job 484                                              $  2,814