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)		4,000		6,000		10,000
Estimated total fixed manufacturing overhead cost	$	5,200	$	20,400	$	25,600
Estimated variable manufacturing overhead cost per MH	$	1.50	$	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	$	22,500	$	7,700
Direct labor cost	$	20,800	$	1,250
Machining machine-hours		2,500		1,500
Finishing machine-hours		500		5,500

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

Solution.

a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate.

25,600 + (1.50*4,000) +(4,000*6)/10,000

= (31,600 +24,000)/10,000 = 5.6 Per MH.

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.

= (2,500 + 500) x 5.6

= $16,680

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.

= (1,500 + 5,500) x 5.6

= $39,200

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?

= $5,200 + (4,000 x $1.50) / 4,000

= 2.8 per MH

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?

= $20,400 + (6,000 x $6.00) / 6,000

= 9.4 per MH

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?

= (2,500 x $2.8 ) + ( 500 x $9.4 )

= $11,700

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?.

= (1,500 x $2.8 ) + ( 5,500 x $9.4 )

= $55,900