John Deere Manufacturing Company has two manufacturing departments--Cutting and Soldering for its series 200 lawn tractor body. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Cutting Soldering Estimated total machine-hours (MHs) 1,250 11,400 Estimated total fixed manufacturing overhead cost $ 15,880 $ 37,300 Estimated variable manufacturing overhead cost per MH $ 3.12 $ 2.40 During the most recent month, John Deere started and completed two jobs--Job 1A and Job 1B. There were no beginning inventories. Data concerning those two jobs follow: Job 1A Job 1B Direct materials $ 12,300 $ 8,492 Direct labor cost $ 18,200 $ 5,870 Cutting machine-hours 700 300 Soldering machine-hours 3,600 5,410 Assume that John Deere uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 80% on manufacturing cost to establish selling prices. Answer the following questions. (round predetermined overhead rate to two decimal places) 1. What is the plantwide predetermined MOH rate

John Deere Manufacturing Company

                                               Cutting      Soldering

Predetermined MOH rates = $19.80        $7.18

Explanation:

a) Data and Calculations:

                                                                                        Cutting      Soldering

Estimated total machine-hours (MHs)                                   1,250       11,400

Estimated total fixed manufacturing overhead cost       $ 15,880  $ 37,300 Estimated variable manufacturing overhead cost per MH $ 3.12      $ 2.40

Total estimated variable manufacturing overhead          $3,900   $27,360

Total manufacturing overhead costs                               $19,780  $64,660

                                        Job 1A        Job 1B   Total

Direct materials            $ 12,300     $ 8,492  $

Direct labor cost           $ 18,200    $ 5,870

Cutting machine-hours        700          300  1,000 hours

Soldering machine-hours 3,600       5,410   9,010 hours

Plantwide predetermined MOH rates:

                                                                                  Cutting      Soldering

Estimated total manufacturing overhead costs      $19,780  $64,660

Total machine hours during the most recent month 1,000        9,010

Predetermined MOH rates =                                     $19.80        $7.18

                    =                                           ($19,780/1,000)    ($64,660/9,010)

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