# Lenko Products Case Study

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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

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