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Question - Jardine Ltd is developing factory overhead rates for the coming year. Budgeted overhead costs for the five factory departments are as follows:
Cost ($)
Cost Driver
Milling
79,500
Machine hours
Finishing
84,600
Direct labour hours
Maintenance
40,500
Repair hours
Factory storeroom
52,800
Requisitions
Factory office
37,800
No. of employees
Total
$295,200
Estimated operating statistics for the coming year are:
Departments
No. of Requisitions
No. ofemployees
Machinehours
Direct labourHours
Production:
5,000
420
10
7,500
12,750
2,500
240
8
4,000
11,250
Support:
400
80
2
600
40
200
8,700
820
24
11,500
24,000
Required:
(a) Calculate a plant-wide overhead rate based on direct labour hours.
(b) Calculate departmental overhead rates assuming the support departments' costs are allocated using the direct method.
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