Referencing Styles : Harvard
Question 1 (5 marks)
Mavis Ltd has two departments, Alpha and Beta. Overhead is applied based on direct labour cost in Department Alpha and machine hours in Department Beta. The following additional information is available:
Department Alpha Department Beta
Direct labour cost $180,000 $165,000
Factory overhead $225,000 $180,000
Machine-hours 51,000 mh 40,000 mh
Actual data for Job100 Department Alpha Department Beta
Direct material requisitioned $10,000 $16,000
Direct labour cost $11,000 $14,000
Machine-hours 5,000mh 3,000 mh
Required:
a. Compute the budgeted factory overhead rate for Department Alpha
(1 Mark)
b. Compute the budgeted factory overhead rate for Department Beta
(1 Mark)
c. What is the total overhead cost of Job 100?
(1 Marks)
d. What are the possible reasons why Mavis Ltd uses two different allocation rate for each department?