Question

Wilmington Company has two manufacturing departments --Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed 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. Estimated Data Manufacturing overhead costs Direct labor-hours Machine-hours Assembly $ 3,960,000 110,000 44,000 Fabrication $4,400,000 66,000 220,000 Total $ 8,360,000 176,000 264,000 Assembly Fabrication Job Bravo Direct labor-hours Machine-hours 15 18 Total 38 33 Required: 1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo? 2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied to Job Bravo? (Round your intermediate calculation to 2 decimal places.)

Answer 1

1) Predetermine overhead rate = 8360000/176000 = 47.50 per labor hour

Overhead applied to Job Bravo = 38*47.50 = 1805

2) Assembly overhead rate = 3960000/110000 = 36 per labor hour

Fabrication overhead rate = 4400000/220000 = 20 per machine hour

Overhead applied to Job Bravo = (23*36+18*20) = 1188