Braegelmann Corporation has two production departments, Casting and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Assembly 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:??CastingAssembly?Machine-hours20,00014,000?Direct labor-hours4,0006,000?Total fixed manufacturing overhead cost$110,000$65,400?Variable manufacturing overhead per machine-hour$1.60??Variable manufacturing overhead per direct labor-hour?$4.50During the current month the company started and finished Job K246. The following data were
recorded for this job:?Job K246:CastingAssembly?Machine-hours6030?Direct labor-hours2040?Direct materials$950$305?Direct labor cost$460$920Required:a. Calculate the estimated total manufacturing overhead for the Casting Department.b. Calculate the estimated total manufacturing overhead for the Assembly Department.c. Calculate the predetermined overhead rate for the Casting Department.d. Calculate the predetermined overhead rate for the Assembly Department.e. Calculate the amount of overhead applied in the Casting Department to Job K246.f. Calculate the amount of overhead applied in the Assembly Department to Job K246.g. Calculate the total job cost for Job K246.h. Calculate the selling price for Job K246 if the company marks up its unit product costs by 40% to determine selling prices.
What will be an ideal response?
a. Casting Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $110,000 + ($1.60 per machine-hour × 20,000 machine-hours)
= $110,000 +$32,000 = $142,000
b. Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)
= $65,400 + ($4.50 per direct labor-hour × 6,000 direct labor-hours)
= $65,400 + $27,000 = $92,400
c. Casting Department:
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $142,000 ÷ 20,000 machine-hours = $7.10 per machine-hour
d. Assembly Department:
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $92,400 ÷6,000 direct labor-hours = $15.40 per direct labor-hour
e. Casting Department:
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $7.10 per machine-hour × 60 machine-hours = $426
f. Assembly Department:
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $15.40 per direct labor-hour × 40 direct labor-hours = $616
g.
| ? | ? | Casting | Assembly | Total |
| ? | Direct materials | $950 | $305 | $1,255 |
| ? | Direct labor | $460 | $920 | 1,380 |
| ? | Manufacturing overhead applied | $426 | $616 | 1,042 |
| ? | Total cost of Job K246 | ? | ? | $3,677 |
h.
| ? | Total cost of Job K246 | $3,677.00 |
| ? | Markup ($3,677.00 × 40%) | 1,470.80 |
| ? | Selling price | $5,147.80 |
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