Solve (2A-2C) Smith Manufacturing currently allocates manufacturing overhead costs by plantwide overhead rate using direct labor costs. Ben Smith, a controller argues for departmental overhead rates to allocate manufacturing overhead costs to products. For department overhead rates, manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor costs in the Assembly Department. At the beginning of 20X3, the following estimates were provided for the coming year: Machining Assembly Direct labor-hours 30,000 60,000 Machine-hours 80,000 20,000 Direct labor cost $500,000 $900,000 Manufacturing overhead costs $420,000 $240,000 During month of the March, the accounting records of the company show the following data for Job #316: Machining Assembly Direct labor-hours 120 70 Machine-hours 60 5 Direct material cost $300 $200 Direct labor cost $100 $400 1) For Plant-wide Overhead Rate, a. Compute the plant-wide manufacturing overhead rate? b. What are the total manufacturing costs of Job #316? c. Assuming smith wants to have a markup of 150% on costs, how much Bauer will charge for Job #316 to the customer. 2) For Department Overhead Rate a. Compute departmental overhead rate for each department. b. What are total manufacturing costs for Job #316? c. Assuming Smith wants to have a markup of 150% on costs, how much Bauer will charge for Job #316 to the customer.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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Solve (2A-2C) Smith Manufacturing currently allocates manufacturing overhead costs by plantwide overhead rate using direct labor costs. Ben Smith, a controller argues for departmental overhead rates to allocate manufacturing overhead costs to products. For department overhead rates, manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor costs in the Assembly Department. At the beginning of 20X3, the following estimates were provided for the coming year: Machining Assembly Direct labor-hours 30,000 60,000 Machine-hours 80,000 20,000 Direct labor cost $500,000 $900,000 Manufacturing overhead costs $420,000 $240,000 During month of the March, the accounting records of the company show the following data for Job #316: Machining Assembly Direct labor-hours 120 70 Machine-hours 60 5 Direct material cost $300 $200 Direct labor cost $100 $400 1) For Plant-wide Overhead Rate, a. Compute the plant-wide manufacturing overhead rate? b. What are the total manufacturing costs of Job #316? c. Assuming smith wants to have a markup of 150% on costs, how much Bauer will charge for Job #316 to the customer. 2) For Department Overhead Rate a. Compute departmental overhead rate for each department. b. What are total manufacturing costs for Job #316? c. Assuming Smith wants to have a markup of 150% on costs, how much Bauer will charge for Job #316 to the customer.

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