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	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.)

Answer 1

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