Question

All one problem, just two pictures to fit it.

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 $1,000,000 12,000 84,000 Assembly $ 144,000 84,000 7,000 Total $1,152,000 96,000 91,000 Job A Direct labor-hours Machine-hours Machining Assembly 10 11 2 Total 15 13 Job Direct labor-hours Machine-hours Machining Assembly 4 12 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.)

Answer 1

1) Plantwide overhead rate = 1,152,000/96000 = 12 per labor hour

a) Manufacturing overhead applied to Job A = 15*12 = 180

Manufacturing overhead applied to Job B = 9*12 = 108

2) Machining department rate = 1,008,000/84000 = 12 per machine hour

Assembly department rate = 144000/84000 = 1.71 per labor hour

Overhead applied to Job A = (11*12+10*1.71) = 149.1

Overhead applied to Job B = (12*12+5*1.71) = 152.55