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Norwich Fabrication (NF) is a job shop that does custom metal fabrication. NF is organized into three departments. There are three inputs into each job done at NF: materials, labor time, and machine time. NF treats labor time and machine time as overhead items. NF charges materials costs directly to each job. NF uses time based predetermined overhead rates to assign labor and machine costs to each job. There are two types of labor and two types of machines.

The annual cost and practical capacity of labor and machines are:

NF recently completed Job XQ389. This is the summary of the cost of materials, labour time, and machine time consumed by this job in each department:

Suppose NF uses machine hours and direct labor hours as cost drivers on a resource basis. Given the summary of Job XQ389s resource use in each department, determine the materials cost, the cost of labor time, and the cost of machine time that each department would allocate to Job XQ389. Then use this information to compute the total cost each department would recognize for Job XQ389 and the total cost for Job XQ389.

Labour Type 1 Annual Cost Practical Capacity (hours) $400,000 8,000 Type 2 $360,000 12,000 Total $760,000 20,000 Machine Type 1 $3,000,000 20,000 Annual Cost Practical Capacity (hours) Type 2 $2,000,000 25,000 Total $5,000,000 45,000 1 Department 2 $400.00 3 $200.00 Materials $500.00 Labour 4 6 0 Type 1 Hours Type 2 Hours 1 4 10 Machine Type 1 Hours Type 2 Hours 0 2. 1 1 1 3 6

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