Question

Bierce Corporation has two manufacturing departments--Machining and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

	Machining		Finishing		Total
Estimated total machine-hours (MHs)		8,000		2,000		10,000
Estimated total fixed manufacturing overhead cost	$	16,000	$	9,400	$	25,400
Estimated variable manufacturing overhead cost per MH	$	3.00	$	6.00

During the most recent month, the company started and completed two jobs--Job B and Job K. There were no beginning inventories. Data concerning those two jobs follow:

	Job B		Job K
Direct materials	$	21,700	$	8,600
Direct labor cost	$	21,800	$	8,400
Machining machine-hours		6,750		1,250
Finishing machine-hours		1,250		750

Required:

a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. (Round your answer to 2 decimal places.)

b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job B. (Do not round intermediate calculations.)

c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job K. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

d. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Machining department? (Round your answer to 2 decimal places.)

e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Finishing department? (Round your answer to 2 decimal places.)

f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job B? (Do not round intermediate calculations.)

g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job K?. (Do not round intermediate calculations.)

	a. Predetermined overhead rate per MH b. Manufacturing overhead applied Job B c. Manufacturing overhead applied Job K d. Machining predetermined overhead rate per MH e. Finishing predetermined overhead rate per MH f. Manufacturing overhead applied job B g. Manufacturing overhead applied job K

Answer 1

a	Predetermined Overhead rate	$                5.62	Working #1
b	Manufacturing Overhead applied to Job B	$44,960	Working #4
c	Manufacturing Overhead applied to Job K	$11,240	Working #4
d	Machining Overhead rate	$                4.60	Working #2
e	Finishing Overhead rate	$                9.70	Working #2
f	Manufacturing Overhead applied to Job B	$43,175	Working #5
g	Manufacturing Overhead applied to Job K	$13,025	Working #5

• Workings

Working #1
Working		Machining	Finishing	Total
A	Estimated Fixed Overhead cost	$16,000	$9,400	$25,400
B	Estimated Total machine hours	8,000	2,000	10,000
C	Variable Overhead rate	$                2.60	$                                                   5.00	$           7.60
D = B x C	Estimated variable Overhead cost	20,800	10,000	30,800
E = A + D	Total Overhead Cost			$56,200
F = E/B	Plantwide Overhead rate			$           5.62

Working #2
		Machining	Finishing
A	Estimated Fixed Overhead cost	$16,000	$9,400
B	Estimated Total machine hours	8,000	2,000
C = A/B	Fixed Overhead rate	$         2.00	$         4.70
D	Variable Overhead rate	$         2.60	$         5.00
E = C+D	Departmental Overhead rate	$         4.60	$         9.70

Working #3
	Machining	Finishing	Total
Job B	6,750	1,250	8,000	machine hours
Job K	1,250	750	2,000	machine hours

Working #4
	Job B		Job K
Direct material	$21,700		$8,600
Direct Labor	$21,800		$8,400
Overhead cost:-
Machining	$37,935	6750 machine hours x $ 5.62	$7,025	1250 machine hours x $ 5.62
Finishing	$7,025	1250 machine hours x $ 5.62	$4,215	750 machine hours x $ 5.62
Total Overhead cost allocated	$44,960		$11,240
Total Cost	$88,460		$28,240
Working #5
	Job B		Job K
Direct material	$21,700		$8,600
Direct Labor	$21,800		$8,400
Overhead cost:-
Machining	$31,050	6750 machine hours x $ 4.6	$5,750	1250 machine hours x $ 4.6
Finishing	$12,125	1250 machine hours x $ 9.7	$7,275	2000 machine hours x $ 9.7
Total Overhead cost allocated	$43,175		$13,025
Total Cost	$86,675		$30,025