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 Total 12 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

Ans. 1	First of all we need to find out the predetermined overhead rate.
	Predetermined overhead rate   =   Budgeted overhead cost / Budgeted Direct labor hours
	$1,760,000 / 88,000
	$20      per direct labor hour
	Plantwide manufacturing overhead applied = Predetermined overhead rate * Actual direct labor hours
	$20 * 16
	$320
Ans. 2	Manufacturing overhead applied from Assembly to Job Bravo (a)		$168
	Manufacturing overhead applied from Fabrication to Job Bravo (b)		$63
	Total departmental Manufacturing overhead applied to Job Bravo (a+b)		$231
	*Working Notes:
	Calculation of departmental overhead rate for Assembly department:
	Overhead rate = Manufacturing overhead cost of Assembly / Estimated Direct labor hours of Assembly
	$770,000 / 55,000
	$14	per direct labor hour
	Calculation of departmental overhead rate for Fabrication department:
	Overhead rate = Manufacturing overhead cost of Fabrication / Estimated Machine hours of Fabrication
	$990,000 / 110,000
	$9	per machine hour
	*Calculations of Manufacturing overhead applied:
	Assembly department:
	Manufacturing overhead applied = Predetermined overhead rate * Actual direct labor hours of Assembly
	$14 * 12
	$168
	Fabrication department:
	Manufacturing overhead applied = Predetermined overhead rate * Actual machine hours of Fabrication
	$9 * 7
	$63