Question

1. Bulla Corporation has two production departments, Machining and Customizing. The company uses a job-order costing...

1. Bulla Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

Machining

Customizing

Machine-hours

12,000

19,000

Direct labor-hours

2000

5000

Total fixed manufacturing overhead cost

$

50,400

$

83,600

Variable manufacturing overhead per machine-hour

$

3.00

Variable manufacturing overhead per direct labor-hour

$

6.00

During the current month the company started and finished Job K369. The following data were recorded for this job:

Job K369:

Machining

Customizing

Machine-hours

50

40

Direct labor-hours

40

50

Required:

Calculate the following:

Predetermined OH rate for Machining (round to 2 decimal places)

$

Predetermined OH rate for Customizing (round to 2 decimal places)

$

Total Amount of OH applied to job K369 through both departments (do not include commas)

$

Homework Answers

Answer #1
Overhead Rate for Machining
Total Fixed Manufacturing overhead cost $50,400
Variable Manufacturing overhead cost (3*12000) 36000
Total Manufacturing overhead cost $86,400
Machine Hours 12000
Overhead Rate = (86400/12000) $7.20
Overhead Rate for Customizing
Total Fixed Manufacturing overhead cost $83,600
Variable Manufacturing overhead cost (6*5000) 30000
Total Manufacturing overhead cost $113,600
Machine Hours 5000
Overhead Rate = (113600/5000) $22.72
Total Amount of overhead applied to Job K369
Machine Hours = 50*7.20 $360.00
Customizing = 50*22.72 $1,136.00
Total Overhead cost applied $1,496.00
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