Question

Bierce Corporation has two manufacturing departments--Machining and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHS) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH Machining Finishing 4,000 6,000 $ 5,200 $ 20,400 $ 1.50 $ 6.00 Total 10,000 $ 25,600 During the most recent month, the company started and completed two jobs--Job B and Job K. There were no beginning inventories. Data concerning those two jobs follow: Job B Job $22,500 $ 7,700 $20,800 $1,250 Direct materials Direct labor cost Machining machine-hours Finishing machine-hours 2,500 500 1,500 5,500 Required: a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. (Round your answer to 2 decimal places.) b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job B. (Do not round intermediate calculations.) c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job K. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) d. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Machining department? (Round your answer to 2 decimal places.) e. Assume that the company uses departmental predetermined overhead rates with machine hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Finishing department? (Round your answer to 2 decimal places.) f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job B? (Do not round intermediate calculations.) g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job K?. (Do not round intermediate calculations.)

Answer 1

a) Plantwide predetermined manufacturing overhead rate:
Total estimated fixed manufacturing overhead costs (a)	$25,600
Total estimated machine hours (b)	10,000
Total fixed manufacturing overhead rate (c = a/b)	$2.56
Total variable manufacturing overhead rate per MH (d) ($1.50 + $6)	$7.50
Total plantwide predetermined manufacturing overhead rate (c + d)	$10.06
b) Manufacturing overheads applied to Job B:
Total machine hours (2,500 + 500)	3,000
Plantwide predetermined overhead rate (b)	$10.60
Total manufacturing overheads applied to Job B (a*b)	$31,800
c) Manufacturing overheads applied to Job K:
Total machine hours (1,500 + 5,500)	7,000
Plantwide predetermined overhead rate (b)	$10.60
Total manufacturing overheads applied to Job K (a*b)	$74,200

d) Departmental predetermined manufacturing overhead rate:	Machining
Estimated total fixed manufacturing overhead cost (a)	$5,200
Estimated total machine-hours (b)	4,000
Estimated Fixed manufacturing overhead cost per machine hour (c = a/b)	$1.30
Estimated Variable manufacturing overhead rate per MH (d)	$1.50
Departmental predetermined overhead rate (c + d)	$2.80
e) Departmental predetermined manufacturing overhead rate:	Finishing
Estimated total fixed manufacturing overhead cost (a)	$20,400
Estimated total machine-hours (b)	6,000
Estimated Fixed manufacturing overhead cost per machine hour (c = a/b)	$3.40
Estimated Variable manufacturing overhead rate per MH (d)	$6
Departmental predetermined overhead rate (c + d)	$9.40
f) Manufacturing overheads applied to Job B:
Machining ($2.80 * 2,500)	$7,000
Finishing ($9.40 * 500)	$4,700
Total manufacturing overheads applied to Job B	$11,700
g) Manufacturing overheads applied to Job K:
Machining ($2.80 * 1,500)	$4,200
Finishing ($9.40 * 5,500)	$51,700
Total manufacturing overheads applied to Job B	$55,900