Homework SourseMason Company has two manufacturing departmentsMachining and
Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B:
Estimated Data
Machining
Assembly
Total
Manufacturing overhead
$
18,032,000
$
784,000
$
18,816,000
Direct labor hours
28,000
644,000
672,000
Machine hours
644,000
23,000
667,000
Job A
Machining
Assembly
Total
Direct labor hours
5
10
15
Machine hours
11
2
13
Job B
Machining
Assembly
Total
Direct labor hours
4
5
9
Machine hours
12
3
15
Required:
1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B? (Round your answers to the nearest whole dollar amount.)
2. Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B? (Round your intermediate calculations and final answers to 2 decimal places.)
| Estimated Data | Machining | Assembly | Total | ||||||
| Manufacturing overhead | $ | 18,032,000 | $ | 784,000 | $ | 18,816,000 | |||
| Direct labor hours | 28,000 | 644,000 | 672,000 | ||||||
| Machine hours | 644,000 | 23,000 | 667,000 | ||||||
Solution
1 Predetermined overhead rate = Total manufacturing overheads / total direct labor hours Total manufacturing overheads 18816000 Total direct labor hours 672000 Predetermined overhead rate 28 Job A Job B Machining 140 112 (5*28) (4*28) Assembly 280 140 (10*28) (5*28) Total 420 252 2 Predetermined overhead rate = Total manufacturing overheads / total hours Machining Assembly Total manufacturing overheads 18032000 784000 Direct labor hours 644000 Machine hours 644000 Predetermined overhead rate 28 1.22 Job A Job B Machining 308 336 (11*28) (12*28) Assembly 12.17 6.09 (1.22*10) (1.22*5) Total 320.17 342.09
