Question

Mason Company has two manufacturing departments-Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B: Estimated Data Manufacturing overhead Direct labor-hours Machine-hours Machining $1,764,000 14.000 126,000 Assembly $ 196,000 126,000 9,000 Total $1,960,000 140,000 135,000 JobA Direct labor-hours Machine-hours Machining Assembly 5 10 11 2 Total 15 13 Job B Direct labor-hours Machine-hours Machining Assembly 5 12 3 Total 9 15 Required: 1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B? 2. Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B? (Round your intermediate calculations and final answers to 2 decimal places.) 1. Manufacturing overhead applied Job A

Answer 1

Answers

• Requirement 1

A	Total manufacturing overhead	$1,960,000.00
B	Total direct labor hours	140000
C = A/B	Predetermined overhead rate	$14.00
D = 15 DLHS x C	Manufacturing Overhead applied to Job A	$210.00	Answer
E = 9 DLHs x C	Manufacturing Overhead applied to Job B	$126.00	Answer

• Requirement 2

		Machining	Assembly
A	Total manufacturing overhead	$1,764,000.00	$196,000.00
B	Total Allocation base	126000	126000
		MHs	DLHs
C = A/B	Departmental Predetermined overhead rates	$14.00	$1.56
	Job A
	MHs	11
	DLHs		10
	Manufacturing Overhead applied to Job A	$154.00	$15.60	$169.60	Answer
	Job B
	MHs	12
	DLHs		5
	Manufacturing Overhead applied to Job B	$168.00	$7.80	$175.80	Answer