Mollie Schlue started Mollies Magnets seven years ago. This small company creates special-order magnets with varying logos
Question:
Required
A. What is the companys plantwide predetermined overhead rate using direct labor hours as the base?
B. What is the companys plantwide predetermined overhead rate using machine hours as the base?
C. How much overhead would be applied to each job if direct labor hours were used as the cost driver for overhead?
D. How much overhead would be applied to each job if machine hours were used as the cost driver for overhead?
E. If Mollies Magnets decided to use department overhead rates, what would the overhead rates be for each department? The assembly department allocates overhead based on direct labor hours and the finishing department allocates overhead based on machine hours.
F. Explain why it is important for Mollies company to use departmental rates as opposed to a single plantwide rate to allocate overheadcosts.
Step by Step Answer:
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins