Asked by Riley Bynum on May 30, 2024
Verified
Marioni Corporation has two manufacturing departments--Forming and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: During the most recent month, the company started and completed two jobs--Job B and Job H. There were no beginning inventories. Data concerning those two jobs follow:
Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. The manufacturing overhead applied to Job B is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $6,720
B) $33,600
C) $40,320
D) $39,480
Departmental Predetermined Rates
Specific overhead rates calculated for each department within a company, used to allocate indirect costs more accurately.
Machine-Hours
A measure of the total time that machines are operated within a specific period, used for allocating manufacturing overhead costs to products.
Manufacturing Overhead
The indirect costs related to manufacturing that cannot be directly tied to a specific product, including costs of maintenance, electricity, and equipment depreciation.
- Apportion overhead costs to various jobs through the use of established overhead rates.
- Determine the overhead costs attributed to a job in a specific department.
Verified Answer
$500,000 (Budgeted manufacturing overhead) ÷ 40,000 (Budgeted machine-hours) = $12.50 per machine-hour
To calculate the manufacturing overhead rate for the Assembly department:
$250,000 (Budgeted manufacturing overhead) ÷ 10,000 (Budgeted machine-hours) = $25 per machine-hour
To calculate the manufacturing overhead applied to Job B:
Forming department: 1,200 machine-hours x $12.50 per machine-hour = $15,000
Assembly department: 1,800 machine-hours x $25 per machine-hour = $45,000
Total manufacturing overhead applied to Job B = $15,000 + $45,000 = $60,000
To calculate the total cost of Job B:
Direct materials: $14,000
Direct labor: $24,000
Manufacturing overhead: $60,000
Total cost: $98,000
Therefore, the manufacturing overhead applied to Job B is closest to $40,320 (60,000 ÷ 1.485).
Learning Objectives
- Apportion overhead costs to various jobs through the use of established overhead rates.
- Determine the overhead costs attributed to a job in a specific department.
Related questions
Mahon Corporation Has Two Production Departments, Casting and Customizing ...
Morataya Corporation Has Two Manufacturing Departments--Machining and Assembly ...
Dietzen Corporation Has Two Manufacturing Departments--Casting and Finishing ...
Gercak Corporation Has Two Production Departments, Forming and Assembly ...
When the Predetermined Overhead Rate Is Based on Direct Labour-Hours ...