Question

Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production 165,000
Fixed manufacturing overhead cost $ 1,980,000
Variable manufacturing overhead cost per machine-hour $ 2.00
1. Compute the plantwide predetermined overhead rate.
2. During the year, Job P90 was started, completed, and sold to the customer for $2,500. The following information was available with respect to this job:
Direct materials $ 1,150
Direct labor cost $ 830
Machine-hours used 72
Compute the total manufacturing cost assigned to Job P90.

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Machine-hours required to support estimated production 165,000

Fixed manufacturing overhead cost $ 1,980,000

Variable manufacturing overhead cost per machine-hour $ 2.00

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= (1,980,000/165,000) + 2

Predetermined manufacturing overhead rate= $14 per machine hour

Job P90:

Direct materials $ 1,150

Direct labor cost $ 830

Machine-hours used 72

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

Allocated MOH= 14*72

Allocated MOH= $1,008

Total manufacturing cost= 1,150 + 830 + 1,008

Total manufacturing cost=  $2,988