Question

Bulla Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

	Machining		Customizing
Machine-hours		12,000			19,000
Direct labor-hours		2000			5000
Total fixed manufacturing overhead cost	$	50,400		$	83,600
Variable manufacturing overhead per machine-hour	$	3.00
Variable manufacturing overhead per direct labor-hour				$	6.00

During the current month the company started and finished Job K369. The following data were recorded for this job:

Job K369:	Machining		Customizing
Machine-hours	50		40
Direct labor-hours	40		50

Required:

Calculate the following:
Predetermined OH rate for Machining (round to 2 decimal places)	$
Predetermined OH rate for Customizing (round to 2 decimal places)	$
Total Amount of OH applied to job K369 through both departments (do not include commas)	$

Answer 1

Calculate the following:

Predetermined OH rate for Machining (round to 2 decimal places) (50400/12000+3)

$7.20 per MH

Predetermined OH rate for Customizing (round to 2 decimal places) (83600/5000+6)

$22.72 DLH

Total Amount of OH applied to job K369 through both departments (do not include commas)

(50*7.2+50*22.72) = 1496