1. Compute the departmental overhead rates using machine hours as the cost driver.
Overhead rates are calculated by dividing the estimated manufacturing overhead cost by the base allocated. The allocation base can either be direct labor hours, direct labor dollars, machine hours and direct material. In this question, the cost drive used is total machine hours
Overhead rate = estimated manufacturing overhead cost/estimated total machine hours
Maxi flow department
The total manufacturing overhead cost comprises of radiator parts fabrication cost, heater assembly, weld and test costs, compressor parts fabrication cost and compressor assembly and test cost.
The total manufacturing overhead cost is 480000 dollars
The allocation base that I used is Continue reading...