Question

20 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:

	Machining		Customizing
Machine-hours		28,000		15,000
Direct labor-hours		1,000		1,000
Total fixed manufacturing overhead cost	$	120,400	$	60,000
Variable manufacturing overhead per machine-hour	$	2.50
Variable manufacturing overhead per direct labor-hour			$	5.00

During the current month the company started and finished Job K369. The following data were recorded for this job:

Job K369:	Machining		Customizing
Machine-hours	70		20
Direct labor-hours	40		80

Required:

Calculate the total amount of overhead applied to Job K369 in both departments. (Do not round intermediate calculations.)

Answer 1

	Machining	Customizing	Total
Machine Hours	28000	15000	43000	machine hours
Direct labor hours	1000	1000	2000	direct labor hours
Fixed Manufacturing costs	$                           1,20,400	$                           60,000
Variable Manufacturing costs	$                              75,000	$                           42,500
For Machine:28,000*$2.5 =$70,000 and 15,000*$2.5 =$37,500
For Direct labor:1,000*$5 =$5,000 and 1,000*$5 =$5,000
Total Manufacturing Costs	$                           1,95,400	$                        1,02,500
Total Machine Hours	43000
Total Direct labor Hours		2000
Predetermined Overhead rate	$                                  4.54	$                             51.25
	Machining	Customizing	Total
Machine Hours	70	20
Predetermined Overhead rate	$                                  4.54	$                               4.54
Overhead allocated	$                                   318	$                                  91	$                                          409
Direct labor hours	40	80
Predetermined Overhead rate	$                                51.25	$                             51.25
Overhead allocated	$                                2,050	$                             4,100	$                                       6,150
Total Overhead allocated			$                                       6,559