Question
Mason Company has two manufacturing departmentsMachining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following
Mason Company has two manufacturing departmentsMachining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B:
| Estimated Data | Machining | Assembly | Total |
|---|---|---|---|
| Manufacturing overhead | $ 1,352,000 | $ 169,000 | $ 1,521,000 |
| Direct labor-hours | 13,000 | 104,000 | 117,000 |
| Machine-hours | 104,000 | 8,000 | 112,000 |
| Job A | Machining | Assembly | Total |
|---|---|---|---|
| Direct labor-hours | 5 | 10 | 15 |
| Machine-hours | 11 | 2 | 13 |
| Job B | Machining | Assembly | Total |
|---|---|---|---|
| Direct labor-hours | 4 | 5 | 9 |
| Machine-hours | 12 | 3 | 15 |
Required:
- If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B?
- Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B?
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Managerial Accounting
Authors: Ray Garrison, Eric Noreen and Peter Brewer
14th edition
978-007811100, 78111005, 978-0078111006
