Question

Merati 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: Estimated total machine-hours (MHS) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH Forming 5,000 $ 28,000 $ 1.80 5,000 $ 10,500 $ 2.60 Total 10,000 $ 38,500 During the most recent month, the company started and completed two jobs-- Job B and Job L. There were no beginning inventories. Data concerning those two jobs follow: Forming machine-hours Assembly machine-hours Job B 3,400 2,000 Job L 1,600 3,000 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.)

Answer 1

Computation the total manufacturing overhead applied to Job B is:

Total manufacturing overhead applied to Job B = Manufacturing cost of overhead applied to Job B for F + Manufacturing cost of overhead applied to Job B for A

= $25,160 + $9,400

= $34,560

Hence, the total manufacturing overhead applied to Job B is $34,560.

Working Notes:

1.

Computation the estimated fixed cost of overhead per machine hour for F is:

Estimated fixed cost of overhead per machine hour for F = Estimated fixed cost of overhead for F/ Number of machine hours for F

= $28,000 / 5,000

= $5.60

Hence, the estimated fixed cost of overhead per machine hour for F is $5.60

2.

Computation the predetermined rate for F is:

Predetermined rate for F = Estimated variable cost of overhead per machine hour for F + Estimated fixed cost of overhead per machine hour for F

= $1.80 + $5.60

= $7.40

Hence, the predetermined rate for F is $7.40

3.

Computation the estimated fixed cost of overhead per machine hour for A is:

Estimated fixed cost of overhead per machine hour for A = Estimated fixed cost of overhead for A/ Number of machine hours for A

= $10,500 / 5,000

= $2.10

Hence, the estimated fixed cost of overhead per machine hour for A is $2.10

4.

Computation the predetermined rate for A is:

Predetermined rate for A = Estimated variable cost of overhead per machine hour for A + Estimated fixed cost of overhead per machine hour for A

= $2.60 + $2.10

= $4.70

Hence, the predetermined rate for F is $4.70

5.

Computation the manufacturing cost of overhead applied to Job B for F is:

Manufacturing cost of overhead applied to Job B for F = Number of machine hours for F * Predetermined rate for F

= 3,400 * $7.40

= $25,160

Hence, the manufacturing cost of overhead applied to Job B for F is $25,160.

6.

Computation the manufacturing cost of overhead applied to Job B for A is:

Manufacturing cost of overhead applied to Job B for A = Number of machine hours for A * Predetermined rate for A

= 2,000 * $4.70

= $9,400

Hence, the manufacturing cost of overhead applied to Job B for A is $9,400.