Beans 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 $162,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 60,000 direct labor-hours. Recently, Job K818 was completed with the following characteristics:

-The amount of overhead applied to Job K818 is closest to:
A) $135
B) $140
C) $415
D) $275

Question

Beans 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 $162,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 60,000 direct labor-hours. Recently, Job K818 was completed with the following characteristics:
 
-The amount of overhead applied to Job K818 is closest to:
A) $135 
B) $140 
C) $415 
D) $275

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $162,000 + ($2.80 per direct labor-hour × 60,000 direct labor-hours) = $162,000 + $168,000 = $330,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $330,000 ÷ 60,000 direct labor-hours = $5.50 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $5.50 per direct labor-hour × 50 direct labor-hours = $275

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