Question

Harnett Corporation has two manufacturing departments--Molding and Assembly. The company used the following data at the beginning of the period to calculate predetermined overhead rates: Estimated total machine-hours (MHS) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH Molding 7,000 $ 39,900 $ 2.00 Assembly 3,000 $ 18,600 $ 4.00 Total 10,000 $ 58,500 During the period, the company started and completed two jobs--Job E and Job M. Data concerning those two jobs follow: Direct materials Direct labor cost Molding machine-hours Assembly machine-hours Job E Job M $21,600 $ 8,500 $21,700 $ 8,600 2,500 4,500 2,500 500 Required: a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. (Round your answer to 2 decimal places.) b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job E. (Do not round intermediate calculations.) C. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the total manufacturing cost assigned to Job E. (Do not round intermediate calculations.) d. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling price for Job E. (Do not round intermediate calculations.) e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Molding department? (Round your answer to 2 decimal places.)

Answer 1

a. Plantwide Predetermined overhead rate Estimated total manufacturing overhead cost / Estimated total machine hours (553,900 + $30,600)/(7,000+ 3.000) MHs $84,500 / 10,000 MHS $8.45 per MH Workings: Molding Estimated total manufacturing overhead cost: Estimated fixed manufacturing overhead Estimated variable manufacturing overhead (S2.00 per MH* 7.000 MHs) $39.900 $14,000 $53,900 Assembly Estimated total manufacturing overhead cost: Estimated fixed manufacturing overhead Estimated variable manufacturing overhead (S4.00 per MH 3,000 MHS) $18.600 $12.000 $30.600 b. The overhead applied to Job E: = Predetermined overhead rate * Machine-hours incurred by the Job E = $8.45 per MH* (2.500 MHs +2.500 MHs) = $8.45 per MH* 5,000 MHs = $42,250 c. The total manufacturing cost assigned to Job E: Job E Direct Materials $21.600 Direct Labor cost $21,700 Manufacturing Overhead Applied $42.250 Total Manufacturing Cost $85,550 d The Selling Price for Job E: Direct Materials Direct Labor cost Manufacturing Overhead Applied Total Manufacturing Cost Mark up (20%) Selling Price Job E $21,600 $21,700 $85,550 $128.850 $25,770 $154,620