Asked by Betty ty_re on Apr 25, 2024
Verified
Parido Corporation has two manufacturing departments--Casting 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 A and Job H.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 H is closest to:
A) $8,328
B) $26,372
C) $18,316
D) $18,044
Predetermined Overhead Rate
A predetermined overhead rate is the rate used to allocate estimated overhead costs to products or services based on a specific cost driver.
Machine-Hours
The total hours that machinery is operated in the production process, used as a basis for allocating manufacturing overhead.
- Determine the allocation methodology of manufacturing overhead to distinct job operations and understand its impact on job cost analysis.
- Calculate and interpret the selling price of jobs based on cost-plus pricing strategies using manufacturing overhead rates.
Verified Answer
AM
Angel Matos Jr6 days ago
Final Answer :
B
Explanation :
The first step is to calculate the estimated total overhead costs in the two departments.
Casting Assembly The second step is to combine the estimated manufacturing overhead costs in the two departments ($59,200 + $10,200 = $69,400)to calculate the plantwide predetermined overhead rate as follow: The overhead applied to Job H is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $6.94 per MH x (2,600 MHs + 1,200 MHs)
= $6.94 per MH x (3,800 MHs)
= $26,372
Casting Assembly The second step is to combine the estimated manufacturing overhead costs in the two departments ($59,200 + $10,200 = $69,400)to calculate the plantwide predetermined overhead rate as follow: The overhead applied to Job H is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $6.94 per MH x (2,600 MHs + 1,200 MHs)
= $6.94 per MH x (3,800 MHs)
= $26,372
Learning Objectives
- Determine the allocation methodology of manufacturing overhead to distinct job operations and understand its impact on job cost analysis.
- Calculate and interpret the selling price of jobs based on cost-plus pricing strategies using manufacturing overhead rates.
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