Question

Problem 3-21 (Algo) Plantwide Versus Multiple Predetermined Overhead Rates (LO3-1, LO3-2] 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 Manufacturing overhead Direct labor hours Machine hours Machining $ 1,008,000 12,000 84,000 Assembly 144,000 84,000 7,000 Total $1,152,000 96,000 91,000 Machining Assembly Total Toba Direct labor hours Machine hours 15 13 Machining Assembly Total Job B Direct labor hours Machine hours 4 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.) 1. Manufacturing overhead applied Job A Manufacturing overhead applied Job B 2. Manufacturing overhead applied Job A Manufacturing overhead applied Job B

Answer 1

1
Estimated manufacturing overhead	1152000
Divide by Estimated direct labor hours	96000
Predetermined overhead rate	12
Manufacturing overhead applied Job A	180	=15*12
Manufacturing overhead applied Job B	108	=9*12
2
Predetermined overhead rate:
Machining Department	12	=1008000/84000
Assembly Department	1.71	=144000/84000
Manufacturing overhead applied Job A	149.10	=(11*12)+(10*1.71)
Manufacturing overhead applied Job B	152.55	=(12*12)+(5*1.71)