Branin 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 total fixed manufacturing overhead cost of $160,000, variable manufacturing overhead of $3.40 per direct labor-hour, and 80,000 direct labor-hours. The company has provided the following data concerning Job A578 which was recently completed: The amount of overhead applied to Job A578 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $500
B) $1,350
C) $2,200
D) $850

Question

Branin 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 total fixed manufacturing overhead cost of $160,000, variable manufacturing overhead of $3.40 per direct labor-hour, and 80,000 direct labor-hours. The company has provided the following data concerning Job A578 which was recently completed:  The amount of overhead applied to Job A578 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $500 
B) $1,350 
C) $2,200 
D) $850

Quizplus · Accepted Answer

To calculate the amount of overhead applied to Job A578, we need to use the predetermined overhead rate.

Predetermined overhead rate = (Total fixed manufacturing overhead cost + Variable manufacturing overhead cost) / Total direct labor-hours
Predetermined overhead rate = ($160,000 + $3.40 per direct labor-hour x 80,000 direct labor-hours) / 80,000 direct labor-hours
Predetermined overhead rate = $160,000 / 80,000 direct labor-hours + $3.40 per direct labor-hour
Predetermined overhead rate = $2.00 per direct labor-hour

Now, we can calculate the amount of overhead applied to Job A578 using the predetermined overhead rate and the actual direct labor-hours worked on the job.

Overhead applied to Job A578 = Predetermined overhead rate x Actual direct labor-hours worked on Job A578
Overhead applied to Job A578 = $2.00 per direct labor-hour x 675 direct labor-hours worked on Job A578
Overhead applied to Job A578 = $1,350

Therefore, the correct answer is B) $1,350.

Branin Corporation Uses a Job-Order Costing System with a Single