Question

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 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 $ 4,800,000 120,000 48,000 Fabrication $5,280,000 72,000 240,000 Total $10,080,000 192,000 288,000 Assembly Fabrication Total Job Bravo Direct labor-hours Machine-hours 25 17 17 20 37 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.) 1. Plantwide manufacturing overhead applied to Job Bravo 2. Manufacturing overhead applied from Assembly to Job Bravo Manufacturing overhead applied from Fabrication to Job Bravo Total departmental manufacturing overhead applied to Job Bravo

Answer 1

1) 2) Plantwide manufacturing overhead applied to Job Bravo manufacturing overhead applied from Assembly to Job Bravo manufacturing overhead applied from Fabrication to Job Bravo Total departmental manufactuirng overhead applied to Job Bravo $2,205 $1,000 $440 $1,440 Workings: Plantwide Predetermined overhead rate 1) = Estimated total manufacturing overhead cost / Estimated total direct labor hours $10,080,000/ 192,000 DLHs $52.50 per DLH The overhead applied to Job Bravo: Overhead applied to Job Bravo Total Direct labor-hours * Predetermined overhead rate 42 hours * $52.50 per DLH $2,205 2) Assembly: Predetermined overhead rate = Estimated manufacturing overhead cost / Estimated direct labor hours = $4,800,000 / 120,000 DLHS $40.00 per DLH The manufacturing overhead applied to Job Bravo: Overhead applied to Job Bravo = Direct labor-hours * Predetermined overhead rate 25 hours * $40.00 per DLH $1,000 Fabrication Predetermined overhead rate Estimated manufacturing overhead cost / Estimated machine hours $5,280.000 / 240,000 MHs $22.00 per MH The manufacturing overhead applied to Job Bravo: Overhead applied to Job Bravo Machine-hours * Predetermined overhead rate = 20 hours * $22.00 per MH $440