Question

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		13,000		10,000
Direct labor-hours		3,000		4,000
Total fixed manufacturing overhead cost	$	62,400	$	44,000
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	90		20
Direct labor-hours	10		90

Required:

Calculate the total amount of overhead applied to Job K369 in both departments.

Answer 1

Particulars	Machining	Customizing
Variable manufacturing overhead per machine-hour	$            2.50
Variable manufacturing overhead per direct labor-hour		$             5.00
Given	Machining	Customizing
Machine-hours	90	20
Direct labor-hours	10	90
Variable manufacturing overhead (A)	$       225.00	$         450.00
	(Machine Hours* Per Machine Hour Rate)	(Labour Hours* Per Labour Hour Rate)
Fixed Manufacturing Over Head Cost	$ 62,400.00	$   44,000.00
Machine Hours	13000	10000
Direct Labour Hours	3000	4000
Fixed Manufacturing Over Head Cost per Hour	$            4.80	$           11.00
	Per Machine Hour	Per Labour Hour
Given	Machining	Customizing
Machine-hours	90	20
Direct labor-hours	10	90
Fixed Manufacturing Over Head (B)	$       432.00	$         990.00
	(Machine Hours* Per Machine Hour Rate)	(Labour Hours* Per Labour Hour Rate)
Total Manufacturing Over Head (A+B)	$       657.00	$     1,440.00