PROBLEM 2-17 Plantwide and Departmental Predetermined Overhead Rates; Overhead Application LO2-1, L02–2 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 page 93 during the year–Job Bravo. Estimated Data Assembly Fabrication Total Manufacturing overhead costs . $600,000 $800,000 $1,400,000 Direct labor-hours. 50,000 30,000 80,000 Machine-hours. 20,000 100,000 120,000 Job Bravo Assembly Fabrication Total Direct labor-hours. 11 3 14 Machine-hours. 3 6 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?

PROBLEM 2-17 Plantwide and Departmental Predetermined Overhead Rates; Overhead Application LO2-1, L02–2 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 page 93 during the year–Job Bravo. Estimated Data Assembly Fabrication Total Manufacturing overhead costs . $600,000 $800,000 $1,400,000 Direct labor-hours. 50,000 30,000 80,000 Machine-hours. 20,000 100,000 120,000 Job Bravo Assembly Fabrication Total Direct labor-hours. 11 3 14 Machine-hours. 3 6 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?

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo?

b Answered: he ABC Company is x
A. Quiz: Test 1: Chapters 1 & 2
A Week 2 Assignment
Bookshelf - Managerial Accour X
1 VitalSource Bookshelf: Manage X
+
A online.vitalsource.com/#/books/9781259995484/cfi/6/24!/4/2/60/2/22/2/2/2@0:0
2. Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
3. Assume that Landen's controller is right about machine-hours being
the company continues to use direct labor-hours as its only overhead cost allocation base what implications does this have for pricing jobs
such as Job 550?
A < Chapter 2 Job-Order ...
Go to Chapter 2 Job-Order
Costing: Calculating Unit Pro.
more accurate overhead cost allocation base than direct labor-hours. If
87
Exercises
PROBLEM 2-17 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 page 93
during the year-Job Bravo.
92
Problems
95
Case
Estimated Data
Assembly
Fabrication
Total
Manufacturing overhead costs
$600,000
$800,000
$1,400,000
Appendix 2A: Activity-Based
Absorption Costing
96
Direct labor-hours
50,000
30,000
80,000
Machine-hours
20,000
100,000
120,000
Glossary (Appendix 2A)
Job Bravo
Assembly
Fabrication
Total
Direct labor-hours
11
3
14
Appendix 2A: Exercises,
Problems, and Case
Machine-hours
3
6.
9
Required:
Appendix 2B: The
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 hase in Assembly and machine hours
as the allocation base in Fabrication, how much manufacturing overhead would be applied to Job Br
103
Predetermined Overhead...
Appendix 2B: Exercises,
Problem, and Case
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Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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