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 Total $1,400,000 $1,680,000 $ 3,080,000 70,000 42,000 112,000 28,000 140,000 168,000 Job Bravo Direct labor-hours Machine-hours Assembly Fabrication Total 15 7 22 7 10 17 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 calculations to 2 decimal places.) $ 27 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 $ 420 $ 605 $ 1,025

Answer 1

Question 1

Plantwide Predetermined Overhead Rate = Total Estimated Manufacturing Overhead / Total Estimated Direct Labour Hours

Total Estimated Direct Labour Hours = 112,000 Hours

Total Estimated Manufacturing Overhead = $ 30,80,000

Plantwide Predetermined Overhead Rate = 30,80,000 / 112,000

Plantwide Predetermined Overhead Rate = $ 27.50 Per Direct Labour Hour

Manufacturing Overhead Applied to Job Bravo = Direct Labour Hours for Job Bravo * Plantwide Predetermined Overhead Rate

Direct Labour Hours for Job Bravo = 22 Hours

Manufacturing Overhead Applied to Job Bravo = 22 * 27.50

Manufacturing Overhead Applied to Job Bravo = $ 605

Requirement 2

Department Overhead Rate for Assembly Department = Total Overhead for Assembly Department / Total Direct Labour Hours for Assembly Department

Total Direct Labour Hours for Assembly Department = 70,000

Total Overhead for Assembly Department = $ 14,00,000

Department Overhead Rate for Assembly Department = 14,00,000 / 70,000

Department Overhead Rate for Assembly Department = $ 20 per Direct Labour Hour

Department Overhead Rate for Fabrication Department = Total Overhead for Fabrication Department / Total Machine Hours for Fabrication Department

Total Overhead for Fabrication Department = $ 16,80,000

Total Machine Hours for Fabrication Department = 140,000

Department Overhead Rate for Fabrication Department = 16,80,000 / 140,000

Department Overhead Rate for Fabrication Department = $ 12 per Machine Hour

Manufacturing Overhead applied to Job Bravo = Overhead applied to Job Bravo in Assembly Department + Overhead applied to Job Bravo in Fabrication Department

Overhead applied to Job Bravo in Assembly Department = 15 Direct Labour Hours * $ 20 per Direct Labour Hour = $ 300

Overhead applied to Job Bravo in Fabrication Department = 10 Machine Hours * $ 12 per Machine Hour = $ 120

Manufacturing Overhead Applied to Job Bravo = 300 + 120

Manufacturing Overhead Applied to Job Bravo = $ 420