Question

Wilmington Company has two manufacturing departments-Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year-Job Bravo. Estimated Data Manufacturing overhead costs Direct labor-hours Machine-hours Assembly $ 770,000 55,000 22,000 Fabrication $ 990,000 33,000 110,000 Total $ 1,760,000 88,000 132,000 Job Bravo Direct labor-hours Machine-hours Assembly Fabrication 12 4 7 Total 16 11 Required: 1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo? 2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied to Job Bravo? (Round your intermediate calculations to 2 decimal places.) 1. Plantwide manufacturing overhead applied to Job Bravo 2. Manufacturing overhead applied from Assembly to Job Bravo Manufacturing overhead applied from Fabrication to Job Bravo Total departmental manufacturing overhead applied to Job Bravo

Answer 1

1	Plantwide manufacturing overhead applied to Job Bravo	$320
2	Manufacturing overhead applied from Assembly to Job Bravo	$168
	Manufacturing overhead applied from Fabrication to Job Bravo	$63
	Total departmental manufacturing overhead applied to Job Bravo	$231

Calculations:

Requirement 1:

Plantwide predetermined overhead = Total Estimated manufacturing overhead costs ÷ direct labor hours = $1,760,000 ÷ 88,000 = $20 per direct labor hour

Plantwide manufacturing overhead applied to Job Bravo = Total direct hours applied x plantwide predetermined overhead = 16 direct labor hours x $20 = $320

Requirement 2:

	Assembly
Manufacturing overhead cost	$770,000
÷ Direct labor hours	55,000
Predetermined rate per direct labor hour	$14
	Fabrication
Manufacturing overhead cost	$990,000
÷ Machine hours	110,000
Predetermined rate per machine hour	$9

Manufacturing overhead applied from Assembly to Job Bravo = 12 direct labor hours x $14 = $168

Manufacturing overhead applied from Fabrication to Job Bravo = 7 machine hours x $9 = $63