Question

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 30,400 Total fixed manufacturing overhead cost $ 425,600 Variable manufacturing overhead per machine-hour $ 5.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 20 Direct materials $ 590 Direct labor cost $ 1,180 The amount of overhead applied to Job T687 is closest to:

Answer 1

Answer:

The amount of overhead applied to Job T687 is closest to: $280.

Explanation:

Predetermined rate = Budgeted Overheads / Budget Activity

                                 = $ 425,600 /  30,400

                                 = $14.00 per machine-hour

Applied overheads to job T687 = Predetermined rate × Actual machine hours used

                                                     =  $14.00 × 20

                                                     =  $280

Conclusion :

The amount of overhead applied to Job T687 is closest to: $280.