Question

Laflame 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: Total machine-hours 70,000 Total fixed manufacturing overhead cost $ 357,000 Variable manufacturing overhead per machine-hour $ 3.90 The estimated total manufacturing overhead is closest to:

Answer 1

Answer:

$630,000

Explanation:

Total manufacturing overhead = Total Variable Manufacturing Overhead + Total fixed Manufacturing Overhead

As provided total fixed overhead = $357,000

And since actual activity is not provided, the standard activity of 70,000 machine hours will be considered.

Total variable overheads based on predetermined overhead rate = Rate $\times$ pre-determined machine hours

= $3.90 $\times$ 70,000 = $273,000

Total Manufacturing Overhead = $357,000 + $273,000 = $630,000