Mansfield, Inc., has two production departments, Assembly and Packaging. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The predetermined overhead rate in the Assembly Department is based on machine hours (MHs) and it is based on direct labor-hours (DLHs) in the Packaging Department. At the beginning of the year, the company made the following estimates:
Assembly Packaging
Direct labor-hours 5,200 62,000
Machine-hours 68, 400 11,900
Total fixed manufacturing overhead cost $390,000 $419,000
Variable manufacturing overhead per DLH $ 3.75
Variable manufacturing overhead per MH $ 3.00 Knowledge Check 01
Required:
1. What is the estimated total manufacturing overhead in the Assembly Department?
O $595,200
O $651,600
O $809.000
O $1,246,700
2. What is the predetermined overhead rate for the Packing Department?
O$8.70 per DLH
O$9.61 per DLH
O$10.51 per DLH
O$18.28 per DLH

The predetermined overhead rate in the Assembly Department is based on machine hours (MHs) and it is based on direct labor-hours (DLHs) in the Packaging Department.

Assembly Packaging

Direct labor-hours 5,200 62,000

Machine-hours 68, 400 11,900

Total fixed manufacturing overhead cost $390,000 $419,000

Variable manufacturing overhead per DLH $ 3.75

Variable manufacturing overhead per MH $ 3.00

Assembly:

Overhead= fixed overhead + variable overhead

Overhead= 390,000 + 68,400*3= $595,200

Packaging:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= (419,000/62,000) + 3.75= $10.51

ayokenny2001 ayokenny2001 · Answer 2 · 2022-02-03T13:18:45+01:00

Total manufacturing overhead Overhead = $595,200

Predetermined overhead rate = $10.51 per DLH

What is manufacturing overhead?

Manufacturing overhead is all indirect costs incurred during the production process. This overhead is applied to the units produced within a production department.

1. Estimated total manufacturing overhead in the Assembly Department?

Total manufacturing overhead Overhead

= Fixed overhead + variable overhead

= 390,000 + 68,400*3

= $595,200

2. Predetermined overhead rate for the Packing Department

Predetermined overhead rate

= Total estimated overhead costs for the period/ total amount of allocation base

= (419,000 / 62,000) + 3.75

= $10.51 per DLH

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