Asked by sauli Lianga on Jun 03, 2024
Verified
Morataya Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: During the most recent month, the company started and completed two jobs--Job B and Job G. There were no beginning inventories. Data concerning those two jobs follow:
Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job B is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $31,392
B) $27,480
C) $39,240
D) $7,848
Plantwide Predetermined Rate
A single overhead rate calculated by dividing total estimated manufacturing overhead costs by the total estimated amount of the allocation base, applied throughout an entire plant or facility.
Machine-Hours
The total number of hours that machinery is in operation, used as a basis for allocating manufacturing overhead costs in a production environment.
- Implement the application of overhead charges to jobs by using previously set overhead rates.
- Fathom the variances between departmental and plantwide overhead rates.
Verified Answer
Predetermined overhead rate = Total estimated manufacturing overhead cost / Total estimated machine-hours
Predetermined overhead rate = ($246,400 + $72,800) / (8,000 + 5,200)
Predetermined overhead rate = $319,200 / 13,200
Predetermined overhead rate = $24.24 per machine-hour
Next, we need to calculate the amount of manufacturing overhead applied to each job using the predetermined overhead rate and the actual machine-hours used for each job.
For Job B:
Manufacturing overhead applied = Predetermined overhead rate x Actual machine-hours used
Manufacturing overhead applied = $24.24 x 1,320
Manufacturing overhead applied = $31,996.80
Therefore, the closest answer is A) $31,392.
For Job G:
Manufacturing overhead applied = Predetermined overhead rate x Actual machine-hours used
Manufacturing overhead applied = $24.24 x 800
Manufacturing overhead applied = $19,392
The total manufacturing overhead applied to both jobs is:
Total manufacturing overhead applied = $31,996.80 + $19,392
Total manufacturing overhead applied = $51,388.80
Therefore, the amount of manufacturing overhead applied to Job B is closest to $31,392, and the best choice is C) $39,240 as this is the closest given option to the actual amount applied.
Learning Objectives
- Implement the application of overhead charges to jobs by using previously set overhead rates.
- Fathom the variances between departmental and plantwide overhead rates.
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