Question

Wings Co. budgeted $570,000 manufacturing direct wages, 3,000 direct labor hours, and had the following manufacturing overhead:

Overhead Cost Budgeted Budgeted Level for Overhead
Pool Overhead Cost Driver Cost Driver
Cost
Materials handling $188,000 4,700 pounds Weight of materials
Machine setup 21,600 540 setups Number of setups
Machine repair 1,260 31,500 machine
hours Machine hours
Inspections 12,400 310 inspections Number of inspections
Requirements for Job 971 which manufactured 4 units of product:
Direct labor 20 hours
Direct materials 130 pounds
Machine setup 30 setups
Machine hours $15.000 machine hours
Inspections 15 inspections
1. Using ABC, overhead cost assigned to Job #971 for machine setup is:____.
a. $2,300.
b. $990.
c. $6,500.
d. $690.
e. $1,020 .
2. Using ABC, overhead cost assigned to Job #971 for machine repair is:____.
a. $2,300.
b. $990.
c. $6,500.
d. $690.
e. $1,020.

Answer 1

Results are below.

Step-by-step explanation:

First, we need to calculate the allocation rates:

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

Machine setup= 21,600/540= $40 per setup

Machine repair= 1,260/31,500= $0.04 per machine hour

Now, we can allocate costs to Job 971:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Machine setup= 40*30= $1,200

Machine repair= 0.04*15,000= $600