Question

Bierce Corporation has two manufacturing departments--Machining and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

	Machining		Finishing		Total
Estimated total machine-hours (MHs)		7,000		3,000		10,000
Estimated total fixed manufacturing overhead cost	$	8,400	$	11,700	$	20,100
Estimated variable manufacturing overhead cost per MH	$	3.00	$	5.00

During the most recent month, the company started and completed two jobs--Job B and Job K. There were no beginning inventories. Data concerning those two jobs follow:

	Job B		Job K
Direct materials	$	21,400	$	8,600
Direct labor cost	$	21,800	$	1,250
Machining machine-hours		5,000		2,000
Finishing machine-hours		500		2,500

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 B. (Do not round intermediate calculations.)

c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job K. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

d. 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 Machining department? (Round your answer to 2 decimal places.)

e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Finishing department? (Round your answer to 2 decimal places.)

f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job B? (Do not round intermediate calculations.)

g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job K?. (Do not round intermediate calculations.)

Answer 1

a	If Company uses Plantwide predefined manufacturing Overhead based on Machine hours, then
		Overhead rate = Total Estimated Fixed Manufacturing Overhead/ Estimated Total Machine Hours
				=$20100/10000 = $2.01 per hour
b	Amount of manufacturing overhead applied to Job B = Total hours used in Job B (Machining machine hours+Finishing machine hours)* Overhead rate (computed at (a))
					= (5000 hours+500 hours)* $2.01 per hour = $11055
c	Amount of manufacturing overhead applied to Job K = Total hours used in Job K (Machining machine hours+Finishing machine hours)* Overhead rate (computed at (a))
					= (2000 hours+2500 hours)* $2.01 per hour = $9045
d	If company uses departmental predetermined overhead rate with machine hour as allocation base, then overhead for each department will be as follows
		Machinery Machine Department Overhead = Total Estimated Fixed Manufacturing Overhead*Total machinery Machine department hours/Total Machine hours
		Machinery Machine Department Overhead				=	$20100*7000/10000 = $14070
		Machinery Machine Department Overhead rate = Machinery Machine Department Overhead/Total Machinery Machine Hours
		Machinery Machine Department Overhead rate = $14070/7000 = $2.01 per hour