Lenko Products Case Study
Assuming the use of a plantwide overhead rate:
a. Compute the rate for the current year. (Show your work for credit; 2 points)
Cutting Machining Assembly Total 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) Cutting Machining Assembly
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 1.80 4.00 0.25
b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. (show work, 2 points)
PROPOSED Cutting Machining Assembly Total
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
a. Compute the rate for the current year. (Show your work for credit; 2 points)
Cutting Machining Assembly Total 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) Cutting Machining Assembly
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 1.80 4.00 0.25
b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. (show work, 2 points)
PROPOSED Cutting Machining Assembly Total
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