I can honestly say I am totally lost on this one. Any help would be greatly appreciated. I have computed what I thought the PH rate should be but the numbers are not coinciding.
Red River Products uses a normal cost; job order costing system. In the mixing department
Overhead is applied using machine hours; on paving overhead is applied using direct
Labor hours. In Dec. 2007, the company estimated the following data for its two departments for 2008
mixing department paving department
Direct labor hours 6,000 14,000
Machine hours 30,000 6,000
Budgeted overhead cost $240,000 $392,000
a. Computer the predetermined OH rate for each department of Red River
b. Job# 220 was started and completed during March 2008. The job cost sheet shows the following:
mixing department paving department
Direct material $22,600 $3,400
Direct labor cost $1,250 $4,050
Direct labor hours 24 120
Machine hours 160 44
Compute the overhead applied to Job #220 for each department and in total
c. If the company had computed a company wide predetermined OH rate rather than departmental rates
Would a rate have indicated the actual OH cost of each job?
