THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 36 - 39.
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company's plant-wide rate is based on machine hours. The company prepared the following estimates at the beginning of the year.
Department 1 Department 2 Total
Prime cost $375,000 $700,000 $1,075,000
THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 36-39
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company's plant-wide rate is based on machine hours. The company prepared the following estimates at the beginning of the year.
Department 1 Department 2 Total
Prime cost $375,000 $700,000 $1,075,000
Overhead cost $420,000 $240,000 $660,000
Direct labor hours 16,000 50,000 66,000
Machine hours 100,000 20,000 120,000
During the year, Test Company reported the following actual results:
Department 1 Department 2 Total
Prime cost $475,000 $850,000 $1,325,000
Overhead cost $450,000 $300,000 $750,000
Direct labor hours 80,000 150,000
Machine hours 20,000 125,000 25,000
Calculate the overhead applied to production for the year:
$600,000 $825,000 $800,000
$660,000