Asked by Julia Guerrero on May 30, 2024
Verified
Prather Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Recently, Job P513 was completed with the following characteristics:
The amount of overhead applied to Job P513 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $76
B) $190
C) $266
D) $114
Plantwide Predetermined Overhead Rate
A single overhead rate calculated for an entire manufacturing plant, applied to all units produced irrespective of department or product differences.
Job-Order Costing System
A cost accounting system that assigns costs to specific production batches or jobs, useful for customized orders.
Direct Labor-Hours
The amount of labor time consumed by workers who are directly engaged in the manufacturing of products, serving as a critical factor in costing and production planning.
- Determine the overhead allocation for particular tasks according to the rates established by various departments.
Verified Answer
Direct materials cost for Job P513 = $500
Direct labor cost for Job P513 = $200 (40 hours x $5)
Predetermined overhead rate = $5 per direct labor-hour
Overhead applied to Job P513 = Predetermined overhead rate x Actual direct labor-hours worked on Job P513
Overhead applied to Job P513 = $5 x 38 = $190
Therefore, the closest amount of overhead applied to Job P513 is $190, which is option B.
Learning Objectives
- Determine the overhead allocation for particular tasks according to the rates established by various departments.
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