Question

Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B:

Estimated Data	Machining			Assembly			Total
Manufacturing overhead	$	16,038,000		$	729,000		$	16,767,000
Direct labor hours		27,000			594,000			621,000
Machine hours		594,000			22,000			616,000

Job A	Machining	Assembly	Total
Direct labor hours	5	10	15
Machine hours	11	2	13

Job B	Machining	Assembly	Total
Direct labor hours	4	5	9
Machine hours	12	3	15

Required:

1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B? (Round your answers to the nearest whole dollar amount.)

2. Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B? (Round your intermediate calculations and final answers to 2 decimal places.)

Answer 1

Answer

• All working forms part of the answer
• Requirement 1

--Working

A	Total Manufacturing Overhead	$ 16,767,000.00
B	Total Direct Labor hours	621,000
C = A/B	Plantwide Predetermined Overhead	$                   27.00

Working		Job A	Job B
A	Total Direct Labor hours	15	9
B	Plantwide Predetermined Overhead	$                   27.00	$                  27.00
C = A x B	Manufacturing Overhead cost applied	$                405.00 per DLHs	$                243.00 per DLHs

--- ANSWER

	Manufacturing Overhead cost applied
to Job A	$                405.00
to Job B	$                243.00

• Requirement 2

---Working

Working		Machining	Assembly
A	Manufacturing Overhead	$ 16,038,000.00	$       729,000.00
	Allocation base	Machine hours	Direct Labor hours
B	Amount of Allocation base	594,000	594,000
C = A/B	Departmental Predetermined Overhead rate	$                   27.00 per Machine hours	$                    1.23 per DLHs

	Job A	Job B
Machining Departmental Overhead allocation:
No. of machine hours	11	12
Departmental Predetermined overhead rate	$                   27.00	$                  27.00
Overheads allocated	$                297.00	$                324.00
Assembly Departmental Overhead allocation:
No. of direct labor hours	10	5
Departmental Predetermined overhead rate	$                     1.23	$                    1.23
Overheads allocated	$                   12.30	$                    6.15
Total Manufacturing Overhead cost applied	$                309.30	$                330.15

---ANSWER

	Manufacturing Overhead cost applied
to Job A	$                309.30
to Job B	$                330.15