# Lenko Products Case Study

Topics: Department store, Manufacturing, The Assembly Pages: 3 (808 words) Published: March 31, 2012
Assuming the use of a plantwide overhead rate:
a. Compute the rate for the current year. (Show your work for credit; 2 points)

CuttingMachiningAssemblyTotal Plant
Direct Labor \$300,000.00 \$200,000.00 \$400,000.00 \$900,000.00 Mfg Overhead \$540,000.00 \$800,000.00 \$100,000.00 \$1,440,000.00 1a) Plantwide O/H Rate 1,440,000/900000 1.60

b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job.(show your work, 2 points) Direct Materials \$12,000.00 \$900.00 \$5,600.00 \$18,500.00 Direct Labor \$6,500.00 \$1,700.00 \$13,000.00 \$21,200.00

6500*1.60 1700*1.60 13000*1.60 21200*1.60
1b) Mfg Overhead \$10,400.00 \$2,720.00 \$20,800.00 \$33,920.00
\$73,620.00

2. Suppose that instead of using a plantwide overhead rate, the company had used a separate predetermined overhead rate in each department. Under these conditions: a. Compute the rate for each department for the current year. (Show a table with each department and the calculated overhead rate for the department, 3 points)

CuttingMachiningAssembly
Direct Labor \$300,000.00 \$200,000.00 \$400,000.00 Mfg Overhead \$540,000.00 \$800,000.00 \$100,000.00
540000/300000 800000/200000 100000/400000
Departmental Mfg O/H Rate 1.804.000.25
b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. (show work, 2 points) PROPOSEDCuttingMachiningAssemblyTotal
Direct Materials \$12,000.00 \$900.00 \$5,600.00 \$18,500.00 Direct Labor \$6,500.00 \$1,700.00 \$13,000.00 \$21,200.00
6500*1.80 1700*4.00 13000*.25
Mfg Overhead \$11,700.00 \$6,800.00 \$3,250.00 \$21,750.00 \$61,450.00 3. Explain the difference between the manufacturing overhead that would have been applied to the Hastings job using the plantwide rate in question 1(b) and using the...