Bulla Corporation has two production departments, Machining and Customizing. The

Question

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 Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour 20,000 2,000 $90,000 $88,000 18,000 1,000 $ 2.00 $ 4.00 During the current month the company started and finished Job K369. The following data were recorded for this job Job K369 Machine-hours Direct labor-hours Machining Customizing 70 40 40 60 Required Calculate the total amount of overhead applied to Job K369 in both departments. (Do not round intermediate calculations.) Overhead applied

Explanation / Answer

Machining overhead rate = 90000/18000 = 5+2 = 7 per machine hour

Customizing overhead rate = 88000/2000 = 44+4 = 48 per direct labour hour

Overhead applied on Job K369 = (70*7+60*48) = $3370

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