Wilmington Company has two manufacturing departments--Assembly and Fabrication.

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.

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?

(Round your intermediate calculation to 2 decimal places.)

Plantwide manufacturing overhead applied to job bravo __________

Manufacturing overhead applied from assembly to job bravo ________

Total department manufacturing overhead applied to job bravo_______

Estimated Data Assembly Fabrication Total Manufacturing overhead costs $ 960,000 $ 1,200,000 $ 2,160,000 Direct labor-hours 60,000 36,000 96,000 Machine-hours 24,000 120,000 144,000

Explanation / Answer

Answer 1

Plantwide manufacturing overhead applied to job bravo =

(Estimated Total Manufacturing overhead costs /  Estimated Total Direct labor-hours ) * Direct labor-hours for Job Bravo

= ($2,160,000 / 96,000 hours) * 18 hours = $405

Answer 2

For Assembly

Note : Wilmington uses  overhead rates with direct labor-hours as the allocation base in Assembly

Manufacturing overhead applied from assembly to job bravo :

(Estimated Manufacturing overhead costs / Direct labor-hours for Assembly ) *  Direct labor-hours for Job Bravo

=( $960,000 / 60,000 hours ) * 13 hours = $208

For Fabrication

Note : Wilmington uses  overhead rates with machine-hours as the allocation base in Fabrication.

Manufacturing overhead applied from Fabrication to job bravo

(Estimated Manufacturing overhead costs / Machine-hours for Fabrication.) * Machine-hours for Job Bravo

($1,200,000 / 120,000 hours) * 8 hours = $80

Total department manufacturing overhead applied to job bravo = $208 + $80 = $288

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