Question

Bullock Corporation has two manufacturing departments, Forming and Assembly, and used the following data at the beginning of the year to calculate predetermined overhead rates:

                                                                                                            Forming         Assembly

            Estimated total machine-hours (MHs)                                   5,000               5,000

            Estimated total fixed manufacturing overhead cost               $28,000           $10,500

            Estimated variable manufacturing overhead cost per MH     $1.80               $2.60

During the most recent month, the company started and completed two jobs--Job A and Job B. There were no beginning inventories. Data concerning those two jobs is as follows:

                                                                                    Job A              Job B

                        Forming machine-hours                      3,400               1,600

                        Assembly machine-hours                    2,000               3,000

Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What was the manufacturing overhead applied to Job B?

Answer 1

Deptt OH rate
Forming:
Variable OH rate per MH				1.8
Fixed OH rate per MH (28000/5000)				5.6
Forming Deptt oh rate				7.4
Assembly:
Variable OH rate per MH				2.6
Fixed OH rate per MH (10500/5000)				2.1
Assembly OH rate				4.7
OH applied for Job B:
MH of Forming deptt				1600
MH of assembly Deptt				3000
OH applied for Forming deppt (1600*7.40)				11840
OH applied for Assembly deptt (3000*4.7)				14100
OH applied to Job B				25940