Reference no: EM131876960

Question - Noah's 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 dollars in the Assembly Department. At the beginning of 2013, the following estimates were provided for the coming year:

Machining Assembly

Direct materials 10,000 30,000

Machine hours 30,000 20,000

Direct labor cost $200,000 $1,000,000

Manufacturing Overhead costs $440,000 $500,000

The accounting records of the company show the following data for Product #APE1:

Machining Assembly

Direct materials 50 100

Machine hours 200 50

Direct material cost $2,100 $1,200

Direct labor cost $1,000 $2,300

Required:

a. Compute the predetermined manufacturing overhead cost driver rate for each department.

b. Compute the total cost of Product #APE1

c. Provide possible reasons why Noah's Manufacturing uses two different cost drivers.