Problem: 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
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Assembly
|
Fabrication
|
Total
|
|
Manufacturing overhead costs
|
$1,400,000
|
$1,680,000
|
$3,080,000
|
|
Direct labor-hours
|
70,000
|
42,000
|
112,000
|
|
Machine-hours
|
28,000
|
140,000
|
168,000
|
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?
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