he Oliver Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of $2.40 with direct labor hours as the allocation base. The company has refined its allocation system by separating manufacturing overhead costs into two cost pools—one for each department. The estimated costs for the Mixing Department, $490,000, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 175,000. The estimated costs for the Packaging Department, $103,500, will be allocated based on machine hours, and the estimated machine hours for the year are 30,000. In October, the company incurred 68,000 direct labor hours in the Mixing Department and 3,000 machine hours in the Packaging Department. Read the requirements LOADING... . Requirement 1. Compute the predetermined overhead allocation rates. Round to two decimal places. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each department. Predetermined OH ÷ = allocation rate Mixing ÷ = Packaging ÷ = Requirement 2. Determine the total amount of overhead allocated in October. Begin by selecting the formula to allocate overhead costs. Allocated mfg. × = overhead costs Compute the overhead allocated in October for each department and the total for both departments. Mixing Packaging Total

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The

Oliver

Company manufactures products in two departments: Mixing and Packaging. The company was allocating manufacturing overhead using a single plantwide rate of

$2.40

with direct labor hours as the allocation base.

The company has refined its allocation system by separating manufacturing overhead costs into two cost

pools—one

for each department. The estimated costs for the Mixing Department,

$490,000,

will be allocated based on direct labor hours, and the estimated direct labor hours for the year are

175,000.

The estimated costs for the Packaging Department,

$103,500,

will be allocated based on machine hours, and the estimated machine hours for the year are

30,000.

October,

the company incurred

68,000

direct labor hours in the Mixing Department and

3,000

machine hours in the Packaging Department.

Read the

requirements

Requirement 1. Compute the predetermined overhead allocation rates. Round to two decimal places.

Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each department.

						Predetermined OH
		÷		=	allocation rate

Mixing

Packaging

Requirement 2. Determine the total amount of overhead allocated in

October.

Begin by selecting the formula to allocate overhead costs.

						Allocated mfg.
		×		=	overhead costs

Compute the overhead allocated in

October

for each department and the total for both departments.

Mixing
Packaging
Total

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