Question

Bulla Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department’s predetermined overhead rate is based on machine-hours and the Customizing 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:

	Machining		Customizing
Machine-hours		23,000		18,000
Direct labor-hours		1,000		10,000
Total fixed manufacturing overhead cost	$	105,800	$	72,000
Variable manufacturing overhead per machine-hour	$	1.50
Variable manufacturing overhead per direct labor-hour			$	3.00

During the current month the company started and finished Job K369. The following data were recorded for this job:

Job K369:	Machining		Customizing
Machine-hours	60		10
Direct labor-hours	30		70

Required:

Calculate the total amount of overhead applied to Job K369 in both departments. (Do not round intermediate calculations.)

Answer 1

	Machining	Customizing	Total
Machine Hours	23000	18000	41000	machine hours
Direct labor hours	1000	10000	11000	direct labor hours
Fixed Manufacturing costs	$                              105,800	$                                    72,000
Variable Manufacturing costs	$                                37,500	$                                    42,000
For Machine:23,000*$1.5 =$34,500 and 18,000*$1.5 =$27,000
For Direct labor:1,000*$3 =$3,000 and 5,000*$3 =$15,000
Total Manufacturing Costs	$                              143,300	$                                  114,000
Total Machine Hours	41000
Total Direct labor Hours		11000
Predetermined Overhead rate	$                      3.495121951	$                        10.363636364
	Machining	Customizing	Total
Machine Hours	60	10
Predetermined Overhead rate	$                      3.495121951	$                          3.495121951
Overhead allocated	$                                     210	$                                           35	$                                            245
Direct labor hours	30	70
Predetermined Overhead rate	$                    10.363636364	$                        10.363636364
Overhead allocated	$                                     311	$                                         725	$                                         1,036
Total Overhead allocated			$                                         1,281