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Calculating Manufacturing Overhead

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I require some assistance calculating manufacturing overhead.

Mathewson Industries has recently switched its method of applying manufacturing overhead from a single predetermined overhead rate based on direct labor hours to activity-based costing (ABC). Assume that the direct labor rate is $18.00 per hour and that there were no beginning inventories. The following cost drivers and rates have been developed for allocating manufacturing overhead costs:

Activity Cost Driver Rate
Material handling Number of parts used $2.00 per part
Assembly and inspection Number of direct labor hours $25.00 per DLH
Testing Number of units tested $5.00 per unit

The following production, costs, and activities occurred during the month of August:

Direct Material Number of Direct Labor
Units Produced Cost Parts Used Hours
6,400 $208,600 142,000 26,480

Required:
A) Calculate the total manufacturing cost and the cost per unit for the month of August.
B) Assume instead that Mathewson Industries applies manufacturing overhead on the basis of $40.00 per direct labor hours (rather than the ABC method). Calculate the total manufacturing overhead cost applied for the month of August.

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Solution Summary

The expert calculates the manufacturing overheads. The productions, costs and activities which occur during the month of August are determined.

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Calculating the Overhead and Determining the Cost of Products

See the attachments.

3-33. The following information relates to the Richard Renick Company for 2005:
Units Percent Complete
Units completed in 2005 390,000
Work-in-process at December 31 72,000 20%
Cost information:
Cost of the beginning work-in-process $14,280
Current year's production cost $248,580

Required:
a. Calculate the number of equivalent units of production.
b. Calculate the cost per equivalent unit of production.
c. Calculate the cost of the ending work-in-process inventory.
d. Calculate the cost of the completed units.
----------------------------

3-13, pg M-85
Willig-Davis Cleaning Equipment began two jobs during March 2004. There was no beginning Inventory. The following information is available:

Job 10 Job 15
Direct material $14,350 $23,530
Direct labor $7,231 $15,125
Machine hours 124 236

The company estimated manufacturing overhead for 2004 is $307,200, and the company estimates that 4,800 machine hours will be used during the year. Willig-Davis applies overhead to production based on machine hours.

Required:
a. Calculate the cost of Job 10.
b. Calculate the cost of Job 15.

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