Asked by Antoine Miquel on Jun 10, 2024
Verified
Dejarnette 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: The estimated total manufacturing overhead is closest to:
A) $416,003
B) $248,000
C) $664,000
D) $416,000
Job-order Costing
A cost accounting system that assigns manufacturing costs to an individual product or batches of products, often used when products are distinct or made to order.
Machine-hours
A measure of production time, indicating the number of hours that machines are operational in the manufacturing process.
- Find the predetermined overhead rates by making use of estimates for total manufacturing overhead and the activity leverage.
Verified Answer
AA
Anhal AlzubaidiJun 16, 2024
Final Answer :
C
Explanation :
The predetermined overhead rate formula is:
Predetermined overhead rate = Estimated total manufacturing overhead/Estimated total machine-hours
Plugging in the given data:
$832,000 / 125,000 machine-hours = $6.656 per machine-hour
To find the estimated total manufacturing overhead, we can use the actual machine-hours used for each job and multiply it by the predetermined overhead rate. However, since we do not have that information, we can use the estimated total machine-hours instead.
The estimated total manufacturing overhead is:
$6.656 per machine-hour x 100,000 machine-hours = $665,600
The closest choice is C) $664,000.
Predetermined overhead rate = Estimated total manufacturing overhead/Estimated total machine-hours
Plugging in the given data:
$832,000 / 125,000 machine-hours = $6.656 per machine-hour
To find the estimated total manufacturing overhead, we can use the actual machine-hours used for each job and multiply it by the predetermined overhead rate. However, since we do not have that information, we can use the estimated total machine-hours instead.
The estimated total manufacturing overhead is:
$6.656 per machine-hour x 100,000 machine-hours = $665,600
The closest choice is C) $664,000.
Learning Objectives
- Find the predetermined overhead rates by making use of estimates for total manufacturing overhead and the activity leverage.
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