Question

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:
What is the estimated total manufacturing overhead in the Assembly Department?
a) $595,200
b) $651,600
c) $809.000
d) $1,246,700

Answer 1

Answer:

Total manufacturing overhead= $595,200

Explanation:

Giving the following information:

The predetermined overhead rate in the Assembly Department is based on machine hours (MHs).

Assembly

Machine-hours 68, 400

Total fixed manufacturing overhead cost $390,000

Variable manufacturing overhead per MH $ 3.00

To calculate the total estimated overhead cost for the Assembly department, we need to calculate the total variable manufacturing overhead:

Total varaible overhead= 3*68,400= $205,200

Now, the total manufacturing overhead:

Total manufacturing overhead= 390,000 + 205,200

Total manufacturing overhead= $595,200