Question

Deloria Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Forming 19,000 4,000 $129,200 $ 1.60 Assembly 15,000 8,000 $77,600 Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor- hour $ 3.00 During the current month the company started and finished Job T288. The following data were recorded for this job: 10 Job T288: Machine-hours Direct labor-hours Direct materials Direct labor cost Forming Assembly 80 40 $ 730 $ 380 $ 900 $1,200 30 The predetermined overhead rate for the Assembly Department is closest to: Multiple Choice $3.00 per direct labor-hour $12.70 per direct labor-hour $5.35 per direct labor-hour $9.70 per direct labor-hour

Answer 1

1
Variable manufacturing overhead per direct labor hour	3.00
Fixed manufacturing overhead per direct labor hour	9.70	=77600/8000
Predetermined overhead rate	12.70	per direct labor hour
Option B $12.70 per direct labor hour is correct
2
Variable manufacturing overhead per direct labor hour	3.80
Fixed manufacturing overhead per direct labor hour	9.30	=46500/5000
Predetermined overhead rate	13.10	per direct labor hour
Direct labor hours Assembly	60
X Predetermined overhead rate	13.10
Overhead applied in Assembly Department to Job P131	786.00
Option A $786.00 is correct