Ronson Corporation has two manufacturing departments--Casting and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
During the most recent month, the company started and completed two jobs--Job C and Job G. There were no beginning inventories. Data concerning those two jobs follow:

-Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours.The amount of manufacturing overhead applied to Job C is closest to:
A) $32,130
B) $11,900
C) $20,230
D) $20,520

Question

Ronson Corporation has two manufacturing departments--Casting and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
  During the most recent month, the company started and completed two jobs--Job C and Job G. There were no beginning inventories. Data concerning those two jobs follow:
 
-Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours.The amount of manufacturing overhead applied to Job C is closest to:
A) $32,130 
B) $11,900 
C) $20,230 
D) $20,520

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Casting
 11ea7761_1940_03fa_81a5_3974be9e3fda_TB2580_00 Customizing
 11ea7761_1940_03fb_81a5_0b231e08dd4a_TB2580_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($36,000 + $23,500 = $59,500) to calculate the plantwide predetermined overhead rate as follow:
 11ea7761_1940_03fc_81a5_c751aaecb3af_TB2580_00 The overhead applied to Job C is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $5.95 per MH x (3,400 MHs + 2,000 MHs)
= $5.95 per MH x (5,400 MHs)
= $32,130

Ronson Corporation Has Two Manufacturing Departments--Casting and Customizing