Question

John Deere Manufacturing Company has two manufacturing departments--Cutting and Soldering for its series 200 lawn tractor body. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Cutting Soldering Estimated total machine-hours (MHs) 1,250 11,400 Estimated total fixed manufacturing overhead cost $ 15,880 $ 37,300 Estimated variable manufacturing overhead cost per MH $ 3.12 $ 2.40 During the most recent month, John Deere started and completed two jobs--Job 1A and Job 1B. There were no beginning inventories. Data concerning those two jobs follow: Job 1A Job 1B Direct materials $ 12,300 $ 8,492 Direct labor cost $ 18,200 $ 5,870 Cutting machine-hours 700 300 Soldering machine-hours 3,600 5,410 Assume that John Deere uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 80% on manufacturing cost to establish selling prices. Answer the following questions. (round predetermined overhead rate to two decimal places) 1. What is the plantwide predetermined MOH rate

Answer 1

Answer:

John Deere Manufacturing Company

                                               Cutting      Soldering

Predetermined MOH rates = $19.80        $7.18

Explanation:

a) Data and Calculations:

                                                                                        Cutting      Soldering

Estimated total machine-hours (MHs)                                   1,250       11,400

Estimated total fixed manufacturing overhead cost       $ 15,880  $ 37,300 Estimated variable manufacturing overhead cost per MH $ 3.12      $ 2.40

Total estimated variable manufacturing overhead          $3,900   $27,360

Total manufacturing overhead costs                               $19,780  $64,660

                                        Job 1A        Job 1B   Total

Direct materials            $ 12,300     $ 8,492  $

Direct labor cost           $ 18,200    $ 5,870

Cutting machine-hours        700          300  1,000 hours

Soldering machine-hours 3,600       5,410   9,010 hours

Plantwide predetermined MOH rates:

                                                                                  Cutting      Soldering

Estimated total manufacturing overhead costs      $19,780  $64,660

Total machine hours during the most recent month 1,000        9,010

Predetermined MOH rates =                                     $19.80        $7.18

                    =                                           ($19,780/1,000)    ($64,660/9,010)