FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Isaacson's Fine Furnishings manufactures upscale custom furniture. Isaacson's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,100,000 of manufacturing overhead to individual jobs.​ However, Delores Cermak​,owner and​ CEO, is considering refining the​ company's costing system by using departmental overhead rates.​ Currently, the Machining Department incurs $740,000 of manufacturing overhead while the Finishing Department incurs $360,000 of manufacturing overhead. Cermak has identified machine hours​ (MH) as the primary manufacturing overhead cost driver in the Machining Department and direct labor​ (DL) hours as the primary cost driver in the Finishing Department.

The Isaacson's plant completed Jobs 450 and 455 on May 15. Both jobs incurred a total of 6 DL hours throughout the entire production process. Job 450 incurred 1 MH in the Machining Department and 5 DL hours in the Finishing Department​ (the other DL hour occurred in the Machining​ Department). Job 455 incurred 5 MH in the Machining Department and 4 DL hours in the Finishing Department​ (the other two DL hours occurred in the Machining​ Department

1.Compute the plantwide overhead rate assuming that Isaacson's expects to incur 27,500total DL hours during the year.

2. Compute departmental overhead rates assuming that Isaacson's expects to incur 14,800 MH in the Machining Department and 18,000 DL hours in the Finishing Department during the year.

3.If Isaacson's continues to use the plantwide overhead​ rate, how much manufacturing overhead would be allocated to Job 450 and Job​ 455? First identify the​ formula, then calculate the amount of manufacturing overhead that would be allocated to the jobs if the plantwide overhead rate is used. ​(Round your answers to the nearest whole​ dollar.)

(I need the answer for number 3)

 

Manufacturing overhead
Plantwide overhead rate
Actual use of allocation base
allocated
%3D
Job 450
%3D
Job 455
Choose from any list or enter any
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Transcribed Image Text:Manufacturing overhead Plantwide overhead rate Actual use of allocation base allocated %3D Job 450 %3D Job 455 Choose from any list or enter any
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Step 1

Predetermined overhead rate is the single plantwide overhead rate that will be used for allocation of overheads into various jobs or departments.

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