Question

Harnett Corporation has two manufacturing departments--Molding and Assembly. The company used the following data at the beginning of the period to calculate predetermined overhead rates:

	Molding		Assembly		Total
Estimated total machine-hours (MHs)		2,000		8,000		10,000
Estimated total fixed manufacturing overhead cost	$	6,000	$	24,800	$	30,800
Estimated variable manufacturing overhead cost per MH	$	1.50	$	3.00

During the period, the company started and completed two jobs--Job E and Job M. Data concerning those two jobs follow:

	Job E		Job M
Direct materials	$	13,900	$	7,800
Direct labor cost	$	21,000	$	7,800
Molding machine-hours		1,250		750
Assembly machine-hours		1,250		6,750

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 E. (Do not round intermediate calculations.)

c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the total manufacturing cost assigned to Job E. (Do not round intermediate calculations.)

d. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling price for Job E. (Do not round intermediate calculations.)

e. 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 Molding 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. What is the departmental predetermined overhead rate in the Assembly department? (Round your answer to 2 decimal places.)

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 E? (Do not round intermediate calculations.)

h. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling price for Job E. (Do not round intermediate calculations.)

	a. Predetermined overhead rate    per MH b. Manufacturing overhead applied c. Manufacturing cost d. Selling price e. Molding predetermined overhead rate per MH f. Assembly predetermined overhead rate per MH g. Manufacturing overhead applied job E h. Selling price for job E

Answer 1

Answer a.

Molding Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $1.50 * 2,000 + $6,000
Estimated manufacturing overhead = $9,000

Assembly Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $3.00 * 8,000 + $24,800
Estimated manufacturing overhead = $48,800

Total estimated manufacturing overhead = $9,000 + $48,800
Total estimated manufacturing overhead = $57,800

Predetermined overhead rate = Total estimated manufacturing overhead / Total estimated machine hours
Predetermined overhead rate = $57,800 / 10,000
Predetermined overhead rate = $5.78

Answer b.

Job E:

Manufacturing overhead applied = Predetermined overhead rate * Actual machine hours
Manufacturing overhead applied = $5.78 * 2,500
Manufacturing overhead applied = $14,450

Answer c.

Job E:

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing cost = $13,900 + $21,000 + $14,450
Total manufacturing cost = $49,350

Answer d.

Job E:

Selling price = Manufacturing cost + Markup
Selling price = $49,350 + 20% * $49,350
Selling price = $59,220

Answer e.

Molding Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $1.50 * 2,000 + $6,000
Estimated manufacturing overhead = $9,000

Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine hours
Predetermined overhead rate = $9,000 / 2,000
Predetermined overhead rate = $4.50 per machine hour

Answer f.

Assembly Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $3.00 * 8,000 + $24,800
Estimated manufacturing overhead = $48,800

Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine hours
Predetermined overhead rate = $48,800 / 8,000
Predetermined overhead rate = $6.10 per machine hour

Answer g.

Job E:

Manufacturing overhead applied = $4.50 * 1,250 + $6.10 * 1,250
Manufacturing overhead applied = $13,250

Answer h.

Job E:

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing cost = $13,900 + $21,000 + $13,250
Total manufacturing cost = $48,150

Selling price = Manufacturing cost + Markup
Selling price = $48,150 + 20% * $48,150
Selling price = $57,780