McKinsey Machines Ltd manufactures a single product A.   It has two cost centers namely molding department and painting department.

Information	Molding Department	Painting Department
Total Manufacturing overheads	$ 1,806,000	$ 2,205,000
Total Machine hours (estimated)	210,000
Total Direct Labour Cost		$ 1,260,000

McKinsey Ltd executes job no. 410.   The cost and output details of Job No.410 are given below:

Information	Molding Department	Painting Department
Direct Materials	$ 1,410	$ 996
Direct Labour	$ 870	$ 2,040
Number of machine hours used in job no. 410	330 hours
Output (units) (expected to be received from Job No. 410)	150 units

Overheads allocation to Job No. 410 will be as follows:

(a) Molding department overheads will be allocated based on machine hours

(b) Painting Department overheads will be allocated using direct labour costs (as a percentage).

Required

(1) Calculate overhead absorption rate for Molding Department and Painting Department based on allocation bases given above                                                       

           

Answer rating: 100% (QA)

Molding Department Overhead Absorption Rate The Molding Departments overhea... View the full answer