Kroeker Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling 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:
During the current month the company started and finished Job T898. The following data were recorded for this job:

-The estimated total manufacturing overhead for the Milling Department is closest to:
A) $240,833
B) $141,100
C) $28,900
D) $112,200

Question

Kroeker Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling 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:
  During the current month the company started and finished Job T898. The following data were recorded for this job:
 
-The estimated total manufacturing overhead for the Milling Department is closest to:
A) $240,833 
B) $141,100 
C) $28,900 
D) $112,200

Quizplus · Accepted Answer

Milling Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $112,200 + ($1.70 per machine-hour × 17,000 machine-hours)
= $112,200 +$28,900 = $141,100

Kroeker Corporation Has Two Production Departments, Milling and Customizing