The Eastern Seaboard Company uses an estimated rate for allocating factory overhead to job orders based on machine hours for the machining department and on a direct labor cost basis for the finishing department. The company budgeted the following for last year:

During the month of December, the cost record for Job 602 shows the following:

REQUIRED
A. What is the estimated overhead allocation rate that should be used in the machining department? In the finishing department?
B. What is the total overhead allocated to Job 602?
C. Assuming that Job 602 consisted of 200 units of product, what is the unit cost for this job?
D. What factors affect the volume of production in a period? Can we know all of the factors before the period begins? Why or why not?
E. Explain why Seaboard would use two different overhead allocationbases.

Transcribed Image Text:

Machining $5,000,000 250,000 15,000 $ 225,000 Finishing Factory overhead Machine hours Direct labor hours Direct labor cost $3,000,000 14,000 16,000 $2,400,000 Machining Direct materials requisitioned Direct labor cost Direct labor hours Machine hours $7,000 300 20 35 Finishing $2,000 $6,750 300