Question

Harootunian 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 80,000 Total fixed manufacturing overhead cost $ 312,000 Variable manufacturing overhead per machine-hour $ 2.10 Recently, Job T629 was completed with the following characteristics: Number of units in the job 50 Total machine-hours 200 The amount of overhead applied to Job T629 is closest to: Select one: a. $1,200 b. $1,620 c. $420 d. $780

Answer 1

Answer:

The correct answer is D.

Explanation:

Giving the following information:

The company based its predetermined overhead rate for the current year on the following data:

Total machine-hours 80,000

Total fixed manufacturing overhead cost $ 312,000

Variable manufacturing overhead per machine-hour $ 2.10

Job T629:

Total machine-hours 200

First, we need to calculate the predetermined overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 312,000/80,000= $3.9 per machine hour

Now, we can calculate the allocated overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH=3.9*200= $780