Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B: Estimated Data Machining Assembly Total Manufacturing overhead $ 7,056,000 $ 441,000 $ 7,497,000 Direct labor hours 21,000 336,000 357,000 Machine hours 336,000 16,000 352,000 Job A Machining Assembly Total Direct labor hours 5 10 15 Machine hours 11 2 13 Job B Machining Assembly Total Direct labor hours 4 5 9 Machine hours 12 3 15 Required: 1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B? (Round your answers to the nearest whole dollar amount.) 2. Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B? (Round your intermediate calculations and final answers to 2 decimal places.)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B:
| Estimated Data | Machining | Assembly | Total | ||||||
| Manufacturing overhead | $ | 7,056,000 | $ | 441,000 | $ | 7,497,000 | |||
| Direct labor hours | 21,000 | 336,000 | 357,000 | ||||||
| Machine hours | 336,000 | 16,000 | 352,000 | ||||||
| Job A | Machining | Assembly | Total |
| Direct labor hours | 5 | 10 | 15 |
| Machine hours | 11 | 2 | 13 |
| Job B | Machining | Assembly | Total |
| Direct labor hours | 4 | 5 | 9 |
| Machine hours | 12 | 3 | 15 |
Required:
1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much
2. Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B? (Round your intermediate calculations and final answers to 2 decimal places.)
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