Question

Prayer Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department’s predetermined overhead rate is based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours.
At the beginning of the current year, the company had made the following estimates:

Machining Customizing
Machine-hours 19,000 13,000
Direct labor-hours 1,000 8,000
Total fixed manufacturing overhead cost $110,200 $68,800
Variable manufacturing overhead per machine-hour $2.00
Variable manufacturing overhead per direct labor-hour $3.60

The estimated total manufacturing overhead for the Machining Department is closest to:

a) $148.200. b) $299,725. c) $38,000. d) $110,200.

Answer 1

Answer:

The correct answer is A.

Explanation:

Giving the following information:

Machining

Machine-hours 19,000

Total fixed manufacturing overhead cost $110,200

Variable manufacturing overhead per machine-hour $2.00

We need to use the following formula:

Estimated overhead= fixed costs + total variable costs

Estimated overhead= 110,200 + 2*19,000

Estimated overhead= $148,200