Bulla Corporation has two production departments Machining a

Bulla Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department\'s predetermined overhead rate is based on machine-hours and the Customizing Department\'s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Machining Customizing Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour 20,000 2,000 $90,000 $88,000 18,000 1,000 $ 2.00 $ 4.00 During the current month the company started and finished Job K369. The following data were recorded for this job Job K369 Machine-hours Direct labor-hours Machining Customizing 70 40 40 60 Required Calculate the total amount of overhead applied to Job K369 in both departments. (Do not round intermediate calculations.) Overhead applied

Solution

Machining overhead rate = 90000/18000 = 5+2 = 7 per machine hour

Customizing overhead rate = 88000/2000 = 44+4 = 48 per direct labour hour

Overhead applied on Job K369 = (70*7+60*48) = $3370