Question

Wilmington Company has two manufacturing departments--Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year--Job Bravo.

Estimated Data Assembly Fabrication Total Manufacturing overhead costs $ 3,200,000 $ 3,600,000 $ 6,800,000 Direct labor-hours 100,000 60,000 160,000 Machine-hours 40,000 200,000 240,000 Job Bravo Assembly Fabrication Total Direct labor-hours 21 13 34 Machine-hours 13 16 29

Required:

1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo?

2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied to Job Bravo?

Answer 1

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