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 (MS) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH Machining Finishing 6,000 5,000 $ 5,100 $ 39,200 $ 1.40 $ 2.00 Total 11,000 $ 44,300 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 K $22,300 $7.900 $24,700 $2,500 Direct materials Direct labor cost Machining machine-hours Finishing machine-hours 4,000 1,000 2,000 4,000 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

Answer 1

A) plant wide overhead rate calculation

Particulars	Amount
Variable overhead
- machining(6000*$1.4)	$8400
- finishing (5000*$2)	$10000
Fixed overhead	$44,300
Total overhead	$62,700
÷ total hours	11000 hours
Plant wide overhead rate	$5.7 per hour

B) overhead applied to job B

= Total machine hours * overhead rate

= (4000+1000)*$5.7

=$28,500

C) overhead applied to job K

= (2000+4000)*$5.7

= $34,200

D) department overhead rate machining department

Overhead = (6000*$1.4) +$5100 = $13500

Rate = $13500/6000

= $2.25 per machining machine hour

E) finishing department

Overhead = (5000*$2) + $39,200

= $49,200

Rate = $49200/5000 = $9.84

F) job B

Machining department overhead = 4000*$2.25 = $9000

Finishing department = 1000*$9.84 = $9840

Total overhead = $18840

G) Job K

Machining = 2000*$2.25 = $4500

Finishing = 4000*$9.840 = $39,360

Total overhead = $43,860

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