Question

Corporation has two manufacturing departments--Casting and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
Casting Customizing Total
Estimated total machine-hours (MHs) 5,000 5,000 10,000
Estimated total fixed manufacturing overhead cost $27,500 $10,500 $38,000
Estimated variable manufacturing overhead cost per machine-hour $1.70 $2.60

During the most recent month, the company started and completed two jobs--Job C and Job G. There were no beginning inventories. Data concerning those two jobs follow:

Job C Job G
Direct materials $10,600 $7,800
Direct labor cost $23,700 $7,900
Casting machine-hours 3,400 1,600
Customizing machine-hours 2,000 3,000

Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The total manufacturing cost assigned to Job G is closest to:

a. $32,130
b. $11,900
c. $20,230
d. $20,520

Answer 1

Answer:

Allocated overhead= $37,260

Explanation:

Giving the following information:

Total

Estimated total machine-hours (MHs) 10,000

Estimated total fixed manufacturing overhead cost $38,000

Estimated variable manufacturing overhead cost per machine-hour $4.3

First, we need to calculate the plantwide predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (38,000/10,000) + 4.3

Predetermined manufacturing overhead rate= $8.1 per machine-hour

Now, we can allocate overhead to Job G:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Job G

Casting machine-hours 1,600

Customizing machine-hours  3,000

Allocated overhead= 8.1* (1,600 + 3,000)= $37,260