Question

Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:

	Molding			Finishing
Direct labor hours	85,000	DLH		170,500	DLH
Machine hours	108,000	MH		91,500	MH

Tarnish Industries uses departmental overhead rates and is planning on a $2 per direct labor hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.

Tarnish Industries uses departmental overhead rates and is planning on a $2.80 per machine hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.

Tarnish Industries uses departmental overhead rates and is planning on a $3.00 per machine hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Answer 1

1. Tarnish Industries uses departmental overhead rates and is planning on a $2 per direct labor hour overhead rate for the molding department.

Estimated manufacturing overhead cost = Molding direct labor hours * Rate per direct labor hour

= 85,000 * $2

= $170,000

2. Tarnish Industries uses departmental overhead rates and is planning on a $2.80 per machine hour overhead rate for the molding department.

Estimated manufacturing overhead cost = Molding machine hours * Rate per machine hour

= 108,000 * $2.80

= $302,400

3. Tarnish Industries uses departmental overhead rates and is planning on a $3.00 per machine hour overhead rate for the finishing department.

Estimated manufacturing overhead cost = Finishing machine hours * Rate per machine hour

= 91,500 * $3.00

= $274,500