Allocating overhead to departments and jobs. The accountants of Meridian Production Company, a company that makes television commercials, made the following estimates for a year:
| |
Filming Department |
Editing Department |
Printing Department |
|
Estimated Overhead
|
$66,000
|
$100,000
|
$120,000
|
|
Estimated Direct Labor Time
|
5,500 Hours
|
6,250 Hours
|
6,000 Hours
|
a. Compute the overhead allocation rates for each department using direct labor hours as a basis.
b. Management wants to know how much the Toyota commercial job cost. The following table shows the materials and labor costs; you will have to add the overhead costs using direct labor hours as the allocation base.
| Toyota Commercial |
Filming Department |
Editing Department |
Printing Department |
|
Direct Material Cost
|
$1,200
|
-
|
$160
|
|
Direct Labor Cost
|
$3,000
|
$4,000
|
$400 |
| Direct Labor Time |
250 Hours |
400 Hours
|
38 Hours |