Question

Bulla Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: 5 Machining Custonizing 16,000 4,000 $76,800 29,000 4,000 $118,900 1.50 Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Skipped $ 3.00 During the current month the company started and finished Job K369. The following data were recorded for this job: Custonizing 20 Machining 60 30 Job K369: Machine-hours Direct labor-hours 90 Required: Calculate the total amount of overhead applied to Job K369 in both departments. (Do not round intermediate calculations.) Overhead applied

Answer 1

Predetermined overhead rate in machining department = ( Estimated total fixed manufacturing overhead cost / Estimated machine hours ) + Estimated variable manufacturing overhead per machine hour = ( 118900 / 29000 ) + 1.50	5.6	per machine hour
Predetermined overhead rate in customizing department = ( Estimated total fixed manufacturing overhead cost / Estimated direct labor hours ) + Estimated variable manufacturing overhead per direct labor hour = ( 76800 / 4000 ) + 3.00	22.2	per direct labor hour

Overhead allocation :	Job K369
Machining department ( 60 * 5.6 )	336
Customizing department ( 90 * 22.2 )	1998
Overhead applied	2334