Question

Diewold Company has two departments, Milling and Assembly. The company uses a job-order casting system and computes a predetermined overhead rate in each department. The Milling Department bases its rate on machine-hours, and the Assembly Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cast Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Milling Assembly 7.500 79.000 50,BOD 3.100 370.000 $ 418.000 3.00 - $ 2.75 $ $ Required: 1. Compute the predetermined overhead rate to be used in each department. (Round your answers to 2 decimal places.) Department Milling Assembly per MH per DLH Predetermined overhead 2. Assume that the overhead rates you computed in (1) above are in effect. The job cost sheet for Job 407, which was started and completed during the year, showed the following: Department Milling Assembly 12 5 Direct labor-hours Machine hours Materials requisitioned Direct Inbor cost $ $ 88 770 41 $ $ 370 160 Compute the total manufacturing cost assigned to Job 407. (Round your intermediate and final answers to 2 decimal places.) Total manufacturing cost

Answer 1

1) COMPUTATION OF PRE DETERMINED OVERHEAD RATE

FOR MINING DEPARTMENT :

Estimated Mfg. Overhead

= fixed + variable = $370000+(50800×$3) = $370000+$152400 = $522400

Total machine hrs. = 50800 hrs

Therefore, pre determine overhead

= (estimated mfg. Overhead ÷ machine hrs.)

= ($522400 ÷ 50800 )

= $10.28 per MH

FOR ASSEMBLY DEPARTMENT :

Estimated Mfg. Overhead

= fixed+variable = $416000+(78000×$2.75) = $416000+$214500 = $630500.

Total Direct Labour hrs. = 78000 hrs.

Therefore, pre determined overhead rate

= ( Estimated mfg. Overhead ÷ Direct labour hrs.)

= $630500 ÷ 78000

= $8.08 per DLH

2) COMPUTATION OF TOTAL MANFACTURING COST ASSIGNED TO JOB 407.

PARTICULARS	MILLING	ASSEMBLY	TOTAL
Material costs	$770	$370	$1140
Direct labour cost	$205 ( $41×5 hrs)	$1920 ( $160×12 hrs )	$2125
Manufacturing overhead	$522224 ($10.28×50800 MH's)	$630240 ($8.08×78000 DLH's)	$1152464
TOTAL MANFACTURING COST	$523199.	$632530.	$1155729

Therefore, Total Mfg. Cost = $1155729.