Question

# Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead...

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 Machining Assembly Total Manufacturing overhead \$ 18,032,000 \$ 784,000 \$ 18,816,000 Direct labor hours 28,000 644,000 672,000 Machine hours 644,000 23,000 667,000
 Job A Machining Assembly Total Direct labor hours 5 10 15 Machine hours 11 2 13
 Job B Machining Assembly Total Direct labor hours 4 5 9 Machine hours 12 3 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 Predetermined overhead rate = Total manufacturing overheads / total direct labor hours Total manufacturing overheads 18816000 Total direct labor hours 672000 Predetermined overhead rate 28 Job A Job B Machining 140 112 (5*28) (4*28) Assembly 280 140 (10*28) (5*28) Total 420 252 2 Predetermined overhead rate = Total manufacturing overheads / total hours Machining Assembly Total manufacturing overheads 18032000 784000 Direct labor hours 644000 Machine hours 644000 Predetermined overhead rate 28 1.22 Job A Job B Machining 308 336 (11*28) (12*28) Assembly 12.17 6.09 (1.22*10) (1.22*5) Total 320.17 342.09