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8 September, 07:19

Eisentrout Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

Machining Customizing

Machine-hours 13,000 29,000

Direct labor-hours 19,000 5,000

Total fixed manufacturing overhead cost $ 68,900 $ 20,500

Variable manufacturing overhead per machine-hour $ 1.00

Variable manufacturing overhead per direct labor-hour $ 4.20

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  1. 8 September, 08:35
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    Instructions are listed below.

    Explanation:

    Giving the following information:

    The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours.

    Machine-hours:

    Machining = 13,000

    Customizing = 29,000

    Direct labor-hours:

    Machining = 19,000

    Customizing = 5,000

    Total fixed manufacturing overhead cost

    Machining = $68,900

    Customizing = $20,500

    Variable manufacturing overhead per machine-hour $ 1.00

    Variable manufacturing overhead per direct labor-hour $ 4.20

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

    Machining:

    Estimated manufacturing overhead rate = (68,900/13,000) + 1 = $6.3 per machine hour

    Customizing:

    Estimated manufacturing overhead rate = (20,500/5,000) + 4.2 = $8.3 per direct labor hour
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