Reference no: EM132984943

Question - All costs incidental to materials procurement and handling until they are issued are charged to the materials account by Cruz Mfg. Co. at a rate predetermined for each of the departments involved.

For 19C, the estimated departmental costs are given:

Purchasing department P175,000

Receiving and Inspection Dept. 124,500

Materials department 83,000

Accounting department (20% is 295,000 estimated to be related to processing of payments for materials.

Purchases for 19C were estimated to amount to P5, 000,000 for more or less 8,300,000 units to be ordered 50 times.

Actual purchases for 19C amounted to P5, 600,000 for total of 8,000,000 units in 52 orders. Costs incurred by the four given departments were as follows:

Purchasing department P180,000

Receiving and inspection department 128,000

Materials department 78,000

Accounting department (20% is estimated to be related 290,000 processing of payments for materials.

Required -

a. Compute the predetermined departmental overhead rates.

b. How much is the applied material handling cost per department?

c. How much is the material handling variance?