Question

Vulcan Molding has three production departments: A, B, and C. At the start of the year, the company estimated that it would incur $2,500,000 of direct labor cost and $8,000,000 of manufacturing overhead as follows:



Required
a. Calculate the overhead that would be assigned to each job assuming the company uses one plant-wide overhead allocation rate based on expected labor cost.
b. Calculate the overhead that would be assigned to each job assuming the company uses a separate overhead allocation rate for each production department based on direct labor cost.
c. Which is preferable: a single overhead rate or separate rates by production department?Explain.


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  • CreatedSeptember 12, 2013
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