Question

Manufacturing overhead $ 364,000 $ 416,000 $ 93,600 $ 873,600 Direct labor $ 208,000 $ 104,000 $ 312,000 $ 624,000 Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows: Department Fabricating Machining Assembly Total Plant Direct materials $ 3,800 $ 400 $ 2,200 $ 6,400 Direct labor $ 4,400 $ 700 $ 7,000 $ 12,100 Manufacturing overhead ? ? ? ?

Answer 1

Answer:

manufacturing overhead is allocated based on direct labor:

                               fabricating      machining     assembling        total

Direct labor            $208,000        $104,000       $312,000     $624,000

Man. overhead       $364,000        $416,000        $93,600     $873,600

overhead rate             1.75                    4                     0.30            1.4

Koopers job: using departmental overhead rates

                               fabricating      machining     assembling        total

Direct materials        $3,800               $400           $2,200         $6,400

Direct labor               $4,400               $700           $7,000         $12,100

overhead rate              1.75                     4                  0.30

Man. overhead          $7,700             $2,800           $2,100        $12,600

total cost                   $15,900            $3,900          $11,300        $31,100

bid price (150% of total manufacturing cost) = $46,650

Koopers job: using plantwide overhead rate

                               fabricating      machining     assembling        total

Direct materials        $3,800               $400           $2,200         $6,400

Direct labor               $4,400               $700           $7,000         $12,100

overhead rate                                                                                   1.4

Man. overhead                                                                              $16,940

total cost                                                                                       $35,440

bid price (150% of total manufacturing cost) = $53,160