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 Fabrication $ 600,000 $ 800,000 50,000 30,000 20,000 100,000 $ Total 1,400,000 80,000 120,000 Assembly Fabrication Total Job Bravo Direct labor-hours Machine-hours 11 6 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 $ 0

Answer 1

1.

Total estimated manufacturing overhead costs = $1,400,000

Total estimated direct labor hours = 80,000

Predetermined overhead rate = Total estimated manufacturing overhead costs/Total estimated direct labor hours

= 1,400,000/80,000

= $17.5 per direct labor hour

Direct labor hours used in Job Bravo = 14

Plantwide manufacturing overheads applied to job Bravo = Direct labor hours used in Job Bravo x Predetermined overhead rate

= 14 x 17.5

= $245

2.

Overhead rate in Assembly department = Estimated manufacturing overheads of Assembly department/Estimated Direct labor hours of Assembly department

= 600,000/50,000

= $12 per direct labor hour

Manufacturing overheads applied to job Bravo from Assembly department = Assembly department Direct labor hours used in Job Bravo x Overhead rate in Assembly department

= 11 x 12

= $132

Overhead rate in Fabrication department = Estimated manufacturing overheads of Fabrication department/Estimated machine hours of Fabrication department

= 800,000/100,000

= $8 per machine hour

Manufacturing overheads applied to job Bravo from Fabrication department = Fabrication department Direct labor hours used in Job Bravo x Overhead rate in Fabrication department

= 6 x 8

= $48

1	Plantwide manufacturing overheads applied to job Bravo	$245
2	Manufacturing overheads applied to job Bravo from Assembly department	$132
	Manufacturing overheads applied to job Bravo from Fabrication department	$48
		$180

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