Compute the predetermined overhead rate used during the year in the Preparation

Question

Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.) Using the following information:

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

      

Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

Requred:    

1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.)

Department Preparation Fabrication Machine-hours 89,000 30,000 Direct labor-hours 32,000 59,800 Direct materials cost $ 188,000 $ 198,000 Direct labor cost $ 271,000 $ 513,000 Fixed manufacturing overhead cost $ 213,600 $ 514,280 Variable manufacturing overhead per machine-hour $ 3.00 - Variable manufacturing overhead per direct labor-hour - $ 5.00

Explanation / Answer

If any doubt please comment

Preparation Fabrication Total Fixed manufacturing overhead cost 213600 514,280 Variable manufacturing overhead per machine-hour 3 Variable manufacturing overhead per direct labor-hour 5 Machine-hours 89,000 30,000 119,000 Direct labor-hours 32,000 59,800 91,800 ans predetermined overhead rate in the Preparation Department Estimated fixed manufacturing overhead/Machine hours+variable man. Overhead (213600/119000)+3 $4.79 per machine hour predetermined overhead rate in the Preparation Department Estimated fixed manufacturing overhead/Direct labor hours+variable man. Overhead (514280/91800)+5 $10.60 per direct labor hour

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