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15 Ko Inc. has two departments and uses a plant-wide predetermined overhead rate (POHR) using direct labor cost (DLC) as the allocation base to apply
15 Ko Inc. has two departments and uses a plant-wide predetermined overhead rate (POHR) using direct labor cost (DLC) as the allocation base to apply manufacturing overhead to the company's jobs. The owner of the company considers switching to departmental predetermined overhead rates that are based on direct labor hours (DLHS) in Dept A and machine-hours (MHs) in Dept. B. Note that actual direct labor cost per hour is $12. At the beginning of the year, the company made the following estimates: $ Estimates: Direct labor costs (DLC) Direct labor hours (DLHs) Machine-hours (MHs) Manufacturing overhead Dept. A Dept. B 26,000 $ 13,700 2,000 1,200 1.800 3,200 34,600 $ 44,800 Assuming the information below for the two jobs, what is the impact on job #22 of using departmental predetermined overhead rates ? (Do not round any intermediate calculations, Round the final answer to the nearest whole dollars.) Actual results: Job #12 DLHs MHs Job #22 DLHS MHS Dept. A 260 140 160 220 Dept. B 180 240 130 280 A. Applied manufacturing overhead will be $2702 lower. B. Applied manufacturing overhead will be $272 lower. C. Applied manufacturing overhead will be $3060 lower. Applied manufacturing overhead will be $508 lower. E There is no difference whether the plant-wide or departmental rates are used. 16 Hurawalhi Company uses machine-hours (MHS) to allocate their manufacturing overhead (MOH) cost with capacity-based method. The company recognized the cost of unused (idle) capacity of $600 on the income statement last year. Given the following information, how much was the company's estimated MHs for planned production last year? Estimated MOH cost (all fixed) Estimated MHs for planned production Estimated MHs at capacity POHR using the traditional method POHR at capacity ? ? MHs ? MHs $ 12 per MH $10 per MH A B. C. D E. 72 MHs 250 MHs 300 MHs 350 MHs 360 MHs
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