BANITOG, BRIGITTE C.

BSA 211

CHAPTER 6
Requirement 1

X Y Z

Manufacturing Overhead cost P        432,000 P       270,000 P      384,000

Overhead rate base Direct labor hours Machine hours Raw material cost

60,000 Direct labor 90,000 machine

Amount of base hours hours P 240,000

P               7.20 P             3.00 P           1.60

Predetermined Overhead rate per direct labor hours per machine hours per material cost

Requirement 2

Applied overhead [see working]                  417,600

Actual costs                  420,000

Under - Applied, because

applied are less than
Overheads are actual.

Under - Applied by                       2,400

--Working

Job 237 Job 238 Job 239 Total

Direct labor hours 7,000.00 30,000.00 21,000.00 58,000.00

Predetermined Overhead rate 7.20 7.20 7.20 7.20

Overhead cost allocated 50,400.00 216,000.00 151,200.00 417,600.00

1. Milling overhead rate = (510,000/60,000) = 8.5

Assembly overhead rate = (800,000/75,000) = 10.67

2. Job Cost

Direct material (800+370) 1,170

Direct labor (45+160) 205

Molding overhead (90*8.5) 765

Assembly overhead (20*10.67) 213.4

Total 2,353.4

3. Yes; if some jobs require a large amount of machine time and a small amount of labor time, they
would be charged substantially less overhead cost if a plantwide rate based on direct labor hours
were used. It appears, for example, that this would be true of Job 123 which required considerable
machine time to complete, but required a relatively small amount of labor hours.