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	Assembly		Fabrication		Total
Manufacturing overhead costs	$	5,720,000	$	6,240,000	$	11,960,000
Direct labor-hours		130,000		78,000		208,000
Machine-hours		52,000		260,000		312,000

Job Bravo	Assembly	Fabrication	Total
Direct labor-hours	27	19	46
Machine-hours	19	22	41

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 calculation to 2 decimal places.)

Answer 1

1	Plantwide predetermined overhead rate=Estimated manufacturing overhead costs/Estimated direct labor hours=11960000/208000=$ 57.50 per direct labor hour
	Manufacturing overhead applied to Job Bravo=Total direct labor hours*Plantwide predetermined overhead rate=46*57.50=$ 2645
2	Departmental predetermined overhead rates:
	Assembly:
	Departmental predetermined overhead rate=Estimated manufacturing overhead costs/Estimated direct labor hours=5720000/130000=$ 44 per direct labor hour
	Fabrication:
	Departmental predetermined overhead rate=Estimated manufacturing overhead costs/Estimated machine hours=6240000/260000=$ 24 per machine hour
	Manufacturing overhead applied to Job Bravo:
									$
	Assembly		(27*44)						1188
	(Direct labor hours in assembly*Departmental predetermined overhead rate)
	Fabrication		(22*24)						528
	(Machine hours in fabrication*Departmental predetermined overhead rate)
	Total								1716