Mason Company has two manufacturing departments-Machining and Assembly. The comp

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 Manufacturing overhead Direct labor hours Machine hours Machining Assembly $3,468,000 289,000 $3,757,000 Total 17,000 204,000 204,000 12,000 221,000 216,000 Job A Direct labor hours Machine hours Machining Assembly Total 10 15 13 Job B Direct labor hours Machine hours Machining Assembly Total 12 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.) 1.Manufacturing overhead applied Job A Manufacturing overhead applied Job B 2. Manufacturing overhead applied Job A Manufacturing overhead applied Job B

Explanation / Answer

1 Manufacturing Overhead Applied Job A 255 Manufacturing Overhead Applied Job B 153 2 Manufacturing Overhead Applied Job A 201.20 Manufacturing Overhead Applied Job B 211.10 Workings Plant wide predetermined overhead rate (using direct labor hours) Manufacturing Overhead/ Direct labour hours =3,757,000/221,000 =17 Manufacturing Overhead Applied Job A =15X17 =255 Manufacturing Overhead Applied Job B =9X17 =153 Departmental predetermined overhead rate (Machining Dept. using machine hours) = Machining Dept. Manufacturing Overhead/ Machine hours =3,468,000/204,000 =17 Departmental predetermined overhead rate (Assembly Dept. using Direct Labour hours) = Assembly Dept. Manufacturing Overhead/ Direct labour hours =289,000/204,000 =1.42 per Direct labour Machining Dept, Assembly Dept. Total Manufacturing Overhead Applied Job A 187                '(11 X17) 14.2        (10*1.42) 201.20 Manufacturing Overhead Applied Job B 204                '(12 X17) 7.10          (5*1.42) 211.10

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