Bramble Company manufactures a line of lightweight running shoes. CEO Mark Bramb
ID: 2341884 • Letter: B
Question
Bramble Company manufactures a line of lightweight running shoes. CEO Mark Bramble estimated that the company would incur $3,171,920 in manufacturing overhead during the coming year. Additionally, he estimated the company would operate at a level requiring 248,000 direct labor hours and 502,681 machine hours.
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Bramble Company manufactures a line of lightweight running shoes. CEO Mark Bramble estimated that the company would incur $3,171,920 in manufacturing overhead during the coming year. Additionally, he estimated the company would operate at a level requiring 248,000 direct labor hours and 502,681 machine hours.
Explanation / Answer
Estimated Manufacturing overhead = $3,171,920
Estimated Labor hours = 248,000 hours
Estimated Machine hours = 502,681 hours
1. Predetermined overhead rate using direct labor hours as overhead application base
**Predetermined Overhead rate = Estimated Overhead ÷ Estimated Labor hours
Estimated Manufacturing overhead = $3,171,920
Estimated Labor hours = 248,000 hours
Therefore, Predetermined Overhead rate = $3,171,920 ÷ 248,000 labor hours
Predetermined Overhead rate = $12.79 per labor hour
2. Calculation of manufacturing overhead amount that should be applied to the job 4375
**Overhead amount to be applied = Predetermined Overhead rate x Actual labor hours
Predetermined Overhead rate = $12.79 per labor hour
Actual labor hours required = 220 labor hours
Manufacturing overhead to be applied to Job 4375 = $12.79 per labor hour x 220 labor hours
Manufacturing overhead to be applied to Job 4375 = $2,814
3. Predetermined overhead rate using machine hours as overhead application base
**Predetermined Overhead rate = Estimated Overhead ÷ Estimated Labor hours
Estimated Manufacturing overhead = $3,171,920
Estimated Machine hours = 502,681 hours
Therefore, Predetermined Overhead rate = $3,171,920 ÷ 502,681 machine hours
Predetermined Overhead rate = $6.31 per machine hour
4. Calculation of manufacturing overhead amount that should be applied to the job 4375
**Overhead amount to be applied = Predetermined Overhead rate x Actual machine hours
Predetermined Overhead rate = $6.31 per machine hour
Actual machine hours required = 560 machine hours
Manufacturing overhead to be applied to Job 4375 =$6.31 per machine hour x 560 machine hours
Manufacturing overhead to be applied to Job 4375 = $3,534
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