Compute the rate to be used in each department for applying overhead in both departments
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Budegeted Cost sheet
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Amount in $
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Dept. A
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Dept. B
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Direct materials
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120,000
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150,000
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Direct labor
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37,500
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145,000
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Prime Cost
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157,500
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295,000
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Overheads
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122,500
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100,000
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Total Product cost
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280,000
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395,000
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2
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Computation of total budgeted labor cost for department B
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Amount in $
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Dept. B
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Total product cost
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395,000
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Less: direct materials
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150,000
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Less: Overheads
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100,000
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Budgeted labor cost for department B
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145,000
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Computation of overhead recovery rate:
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Dept. A
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Dept. B
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Total overheads (a), $
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122,500
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100,000
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Basis of recovery
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labour hours
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machine hours
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Budegted labor / machine hours (b)
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2,500
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5,000
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Overhead recovery rate (a/b)
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49.00
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20.00
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