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: Estimated total machine-hours (MHS) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH Machining Finishing 5,000 5,000 $ 6,500 $ 29,500 $ 2.00 $ 4.00 Total 10,000 $ 36,000 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 $ 16,200 $8,400 $22,700 $2,500 Direct materials Direct labor cost Machining machine-hours Finishing machine-hours 4,000 1,000 1,000 4,000

Answer 1

a.
	Machining	Finishing	Total
Estimated total machine hours	5000	5000	10000
(*) Estimated variable manufacturing overhead cost per MH	2.00	4.00
Estimated total variable manufacturing overhead cost	10000	20000	30000
Estimated total fixed manufacturing overhead	6500	29500	36000
Estimated total manufacturing overhead	16500	49500	66000

Predetermined overhead rate = Estimated total manufacturing overhead / Estimated total machine hours = 66000 / 10000

6.60

per MH

b.
Manufacturing overhead applied to Job B = Total Machine hours of Job B * Predetermined overhead rate = ( 4000 + 1000 ) * 6.60	33000
c.
Maunfacturing overhead applied to job K = Total machine hours of Job K * Predetermined overhead rate = ( 1000 + 4000 ) * 6.60	33000

d.
Machining predetermined overhead rate = ( Estimated total fixed manufacturing overhead cost of machining department / Estimated total machine hours of machining department ) + Estimated variable A19manufacturing overhead cost per MH of machining department = ( 6500 / 5000 ) + 2.00	3.30	per MH
e.
Finishing predetermined overhead rate = ( Estimated total fixed manufacturing overhead cost of Finishing department / Estimated total machine hours of Finishing department ) + Estimated variable manufacturing overhead cost per MH of Finishing department = ( 29500 / 5000 ) + 4.00	9.90	per MH

f.
Manufacturing overhead applied to Job B = ( Machining machine hours of Job B * Machining predetermined overhead rate ) + ( Finishing machine hours of Job B * Finishing predetermined overhead rate ) = ( 4000 * 3.30 ) + ( 1000 * 9.90 )	23100
g.
Manufacturing overhead applied to Job K = ( Machining machine hours of Job K * Machining predetermined overhead rate ) + ( Finishing machine hours of Job K * Finishing predetermined overhead rate ) = ( 1000 * 3.30 ) + ( 4000 * 9.90 )	42900