Vasilopoulos 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-hours17,00011,000?Direct labor-hours3,0006,000?Total fixed manufacturing overhead cost$119,000$51,000?Variable manufacturing overhead per machine-hour$2.10??Variable manufacturing overhead per direct labor-hour?$3.10During the current month the company started and finished Job A182. The following data

Question

were recorded for this job:?Job A182:CastingAssembly?Machine-hours5020?Direct labor-hours1050?Direct materials$895$365?Direct labor cost$240$1,200Required: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 total amount of overhead applied to Job A182 in both departments.f. Calculate the total job cost for Job A182.g. Calculate the selling price for Job A182 if the company marks up its unit product costs by 20% to determine selling prices.

What will be an ideal response?

Answer 1

a. Casting Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $119,000 + ($2.10 per machine-hour × 17,000 machine-hours)
= $119,000 +$35,700 = $154,700

b. Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)
= $51,000 + ($3.10 per direct labor-hour × 6,000 direct labor-hours)
= $51,000 + $18,600 = $69,600

c. Casting Department:
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $154,700 ÷ 17,000 machine-hours = $9.10 per machine-hour

d. Assembly Department:
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $69,600 ÷ 6,000 direct labor-hours = $11.60 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 = $9.10 per machine-hour × 50 machine-hours = $455
Assembly Department: Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $11.60 per direct labor-hour × 50 direct labor-hours = $580

Overhead applied to Job A182