Question

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	$	16,038,000		$	729,000		$	16,767,000
Direct labor hours		27,000			594,000			621,000
Machine hours		594,000			22,000			616,000

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.)

Answer 1

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Part 1
Manufacturing overhead	a	$    16,767,000
Direct labor hours	b	621,000
Predetermined overhead rate	a/b	$              27.00
Job A	15*$27	$                  405
Job b	9*$27	$                  243
Part 2
Estimated Data		Machining	Assembly
Manufacturing overhead		$    16,038,000	$      729,000
Direct labor hours			594,000
Machine hours		594,000
Predetermined overhead rate		$              27.00	$             1.23
		Job A
Machining	11*$27	$            297.00
Assembly	10*$1.23	$              12.27
Total		$            309.27
		Job B
Machining	12*$27	$            324.00
Assembly	5*$1.23	$                 6.14
Total		$            330.14