C.A.S. has two production departments, Assembly and Customizing. The company use
ID: 2332638 • Letter: C
Question
C.A.S. has two production departments, Assembly and Customizing. The company used the following estimates to calculate predetermined overhead rates:
Assembly Customizing
Total machine hours 19,000 15,000
Direct labor hours 4,000 6,000
Fixed manufacturing overhead $100,700 $63,000
Variable manufacturing overhead per machine hour $2.00 -
Variable manufacturing overhead per labor hour - $3.90
Overhead rate based on: Machine hour Labor hour
1. What is the predetermined overhead rate for the Assembly department?
2. What is the predetermined overhead rate for the Customizing department?
3. If a Job 354 uses 72.2 machine hours and 100 labor hours, how much manufacturing overhead would be added to the costs included in Job 354?
Explanation / Answer
Requirement 1
Assembly Department
(A)
Total Fixed Overheads
$ 100,700.00
(B)
Total machine Hours
19000
(A/B)
Predetermined Overhead rate
$ 5.30
Answer
Predetermined overhead rate for the Assembly department = $5.30 per Machine Hour
Requirement 2
Customizing
(A)
Total Fixed Overheads
$ 63,000.00
(B)
Total Labor Hours
6000
(A/B)
Predetermined Overhead rate
$ 10.50
Predetermined overhead rate for the Customizing department= $10.50
Requirement 3
Manufacturing overheads for Job 354
Overheads of Assembly Department
Fixed Overheads Applied
(A)
Machine Hours
72.2
(B)
Predetermined Overhead rate
$ 5.30
C= (AxB)
Fixed Overheads Applied
$ 382.66
(D)
Machine Hours
72.2
(E)
Rate per Machine Hour
$ 2.00
F=(DxE)
Variable manufacturing Overheads
$ 144.40
(C+F)
Total manufacturing Overheads for Assembly Department
$ 527.06
Overheads of Customizing Department
Fixed Overheads Applied
(A)
Labor Hours
100
(B)
Predetermined Overhead rate
$ 10.50
C= (AxB)
Fixed Overheads Applied
$ 1,050.00
(D)
Labor Hours
100
(E)
Rate per Labor Hour
$ 3.90
F=(DxE)
Variable manufacturing Overheads
$ 390.00
(C+F)
Total manufacturing Overheads for Customizing Department
$ 1,440.00
Total manufacturing Overheads for Assembly Department
$ 527.06
Total manufacturing Overheads for Customizing Department
$ 1,440.00
Total manufacturing Overheads
$ 1,967.06
Manufacturing overhead that would be added to the costs included in Job 354 is $1967.06
Requirement 1
Assembly Department
(A)
Total Fixed Overheads
$ 100,700.00
(B)
Total machine Hours
19000
(A/B)
Predetermined Overhead rate
$ 5.30
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