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) plant wide overhead rate calculation

Particulars	Amount
Variable overhead
- machining(7000*$3)	$21000
- finishing (3000*$5)	$15000
Fixed overhead	$20100
Total overhead	$56100
÷ total hours	10000 hours
Plant wide overhead rate	$5.61 per hour

B) overhead applied to job B

= Total machine hours * overhead rate

= (5000+500)*$5.61

=$30855

C) overhead applied to job K

= (2000+2500)*$5.61

= $25245

D) department overhead rate machining department

Overhead = (7000*$3) +$8400 = $29400

Rate = $29400/7000

= $4.2 per machining machine hour

E) finishing department

Overhead = (3000*$5) + $11700

= $26700

Rate = $26700/3000 = $8.90

F) job B

Machining department overhead = 5000*$4.20 = $21000

Finishing department = 500*$8.90 = $4450

Total overhead = $25450

G) Job K

Machining = 2000*$4.20 = $8400

Finishing = 2500*$8.90 = $22250

Total overhead = $30650

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