Reference no: EM13496395

Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20X5, the following estimates were provided for the coming year:

	Machining	Assembly
Direct labor-hours	10,000 dlh	90,000 dlh
Machine-hours	100,000 mh	5,000 mh
Direct labor cost	$ 80,000	$720,000
Manufacturing overhead costs	$250,000	$360,000

The accounting records of the company show the following data for Job #846:

	Machining	Assembly
Direct labor-hours	50 dlh	120 dlh
Machine-hours	170 mh	10 mh
Direct material cost	$2,700	$1,600
Direct labor cost	$ 400	$ 900

Required:

a. Compute the manufacturing overhead allocation rate for each department.

b. Compute the total cost of Job #846.

c. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.