Problem 2-17 (Algo) Plantwide and Departmental Predetermined Overhead Rates; Overhead Applicat LO2-1, LO2-2] Wilmington Company has two manufacturing departments-Assembly and Fabrication. It considers all of its manufacturing overhea costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second s of data relates to one particular job completed during the year-Job Bravo, Estimated Data Manufacturing overhead costs Direct labor-hours Machine-hours Assembly $ 1,400,000 70,000 28,000 Fabrication Total $1,680,000 $ 3,080,000 42,000 140,000 112,000 168,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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![Problem 2-17 (Algo) Plantwide and Departmental Predetermined Overhead Rates; Overhead Application
[LO2-1, LO2-2]
Wilmington Company has two manufacturing departments-Assembly and Fabrication. It considers all of its manufacturing overhead
costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set
of data relates to one particular job completed during the year-Job Bravo.
Estimated Data
Manufacturing overhead costs
Direct labor-hours
Machine-hours
Job Bravo
Direct labor-hours
Machine-hours
Assembly
15
7
Assembly
$ 1,400,000
70,000
28,000
Fabrication
7
10
Fabrication
Total
$ 1,680,000 $ 3,080,000
112,000
168,000
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42,000
140,000
Total
22
17
Required:
1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would
be applied to Job Bravo?
2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and
4 of 9 T
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