1. Mr. Jones is considering using a job order cost system in two manufacturing departments. He would like the manufacturing overhead to be applied to jobs on the basis of direct labor cost in Department A and machine hours in Department B. In order to establishing the predetermined overhead rates for 2022, the following estimates were made for the year:

Department

A B

Manufacturing overhead $2,100,000 $1,400,000

Direct labor cost 1,500,000 1,200,000

Direct labor hours 100,000 100,000

Machine hours 200,000 400,000

During January the following costs and production data :was collected.

Department

A B

Direct materials used $195,000 $128,000

Direct labor cost 100,000 110,000

Manufacturing overhead incurred 130,000 135,000

Direct labor hours 8,000 8,400

Machine hours 16,000 34,000

Mr Jones wants you to:

(a) Compute the predetermined overhead rate for each department. 4 Marks

(b) Compute the total manufacturing cost assigned to jobs in January in each department.

6 Marks