Problem 217 Plantwide and Departmental Predetermined Overhea

Problem 2-17 Plantwide and Departmental Predetermined Overhead Rates; Overhead Application [LO2- 1, LO2-2) Wilmington Company has two manufacturing departments-Assembly and Fabrication, It considers all of its manufacturing overhead costs to be fxed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year-Job Bravo 140,00 224,000 Machine hours 56,000 Machine hours 24 ron used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would 1. If Wilming 2. If Wilmington uses departmental (Round your i predetermined overhead rates with direct labor-hours as the allocation base in Assembly and as the allocation base in Fabrication, how much manufacturing $ 3,125 $ 2

Solution

1. Plantwide manufacturing overhead applied to Job Bravo

Formula = (Job bravo Total Labour hours / Estimated Total Labour hour of the plant)*Estimated Total manufacturing overhead costs.

= (50/224)*14,000,000

= $ 3,125

2. a) Manufacturing overhead applied from assembly to Job Bravo

Formula = (Job Bravo\' assembly direct labour hours /Plantwide assembly labour hours)*Plantwide manufacturing overhead for Assembly

= (29/140,000)*6720000

= $ 1,392

b) Manufacturing overhead applied from fabrication to Job Bravo

Formula = (Job Bravo\' fabrication machine hours /Plantwide fabrication machine hours)*Plantwide manufacturing overhead for Fabrication

= (24/280000)*7280000

= $ 624

Total = 1392+624 = $ 2,016