Pangle Corporation Has Two Production Departments, Forming and Customizing

Question

Examlex · Accepted Answer

The Answer is Forming Department:
Forming Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $91,200 + ($2.10 per machine-hour × 16,000 machine-hours)
= $91,200 +$33,600 = $124,800
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $124,800 ÷ 16,000 machine-hours = $7.80 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $7.80 per machine-hour × 50 machine-hours = $390
Customizing Department:
Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)
= $99,000 + ($3.10 per direct labor-hour × 9,000 direct labor-hours)
= $99,000 + $27,900 = $126,900
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $126,900 ÷ 9,000 direct labor-hours = $14.10 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14.10 per direct labor-hour × 50 direct labor-hours = $705
Overhead applied to Job M109

Forming Department: Forming Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $91,200 + ($2.10 per machine-hour × 16,000 machine-hours) = $91,200 +$33,600 = $124,800 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $124,800 ÷ 16,000 machine-hours = $7.80 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $7.80 per machine-hour × 50 machine-hours = $390 Customizing Department: Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department) = $99,000 + ($3.10 per direct labor-hour × 9,000 direct labor-hours) = $99,000 + $27,900 = $126,900 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $126,900 ÷ 9,000 direct labor-hours = $14.10 per direct labor-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14.10 per direct labor-hour × 50 direct labor-hours = $705 Overhead applied to Job M109

Pangle Corporation Has Two Production Departments, Forming and Customizing

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