## Question

###### I Saved A company has two manufacturing departments--Machinery and Assembly. The company consid costs to be...

i Saved A company has two manufacturing departments--Machinery and Assembly. The company consid costs to be fixed costs. It provided the following estimates at the beginning of the year as well as A and B. Estimated Data Manufacturing overhead Direct labor-hours Machine-hours Machining $12,500, eee 25, eee 5ee, eee Assembly $ 625, ege 500, eee 20,000 Total $13,125,000 525, eee 520,000 Job Direct labor-hours Machine-hours Machining Assembly 5 10 11 2 Total 15 13 Job B Direct labor-hours Machine-hours Total Machining Assembly 4 5 12 3 15 1. If the company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation manufacturing overhead cost would be applied to Job A? Job B? 2. Assume that the company uses departmental predetermined overhead rates. The Machining Departmer machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufac be applied to Job A? Job B? (Round your intermediate calculations and final answers to 2 decimal places 1. Manufacturing overhead applied JobA Manufacturing overhead applied Job B < Prev 2 of 26 Next > FI FP 4 - FS FE FY FB F9 H F10 F12 2 3 $ 4 % 5 & 6 8 7 0 147

## Answers

1 Manufacturing Overhead Applied to Job A $375 Manufacturing Overhead Applied to Job B $225 2 Manufacturing Overhead Applied to Job A $287.50 Manufacturing Overhead Applied to Job B $306.25 Explanation;

1.a) Plant wide Predetermined Overhead Rate = Total Manufacturing Overhead / Total Direct Labor Hour

=$13,125,000/ 525,000 = $25

Manufacturing Overhead Applied Job A : Total Direct Labor Hour × Plant Wide Predetermined Overhead Rate

=$15 ×25 = $375

b) Manufacturing Overhead Applied to Job.B = $9 ×$25 = $225

2. Department Predetermined Overhead Rate;

Machining = Manufacturing Overhead / Machine Hour

Machining =$12,500,000/ 500,000 = 25 Per MH

Assembly = Manufacturing Overhead / Labor Hours

Assembly =$625,000/500,000 =1.25

a) Manufacturing Overhead Applied to Job A

=(11×$25) + (10 ×$1.25) = $275 +$12.5 = $287.5 b) Manufacturing Overhead Appled to Job B ;

(12×$25) + (5× $1.25) =$300 +$6 25 = 306.25

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