Malakan Corporation has two production departments, Machining and Finishing. 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 Finishing 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 K368. The following data were recorded for this job:
The amount of overhead applied in the Machining Department to Job K368 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $856.00
B) $168.00
C) $624.00
D) $140,400.00

Question

Malakan Corporation has two production departments, Machining and Finishing. 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 Finishing 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 K368. The following data were recorded for this job:
 The amount of overhead applied in the Machining Department to Job K368 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $856.00 
B) $168.00 
C) $624.00 
D) $140,400.00

Quizplus · Accepted Answer

The Machining Department's predetermined overhead rate = Estimated overhead costs / Estimated machine-hours = $240,000 / 60,000 machine-hours = $4.00 per machine-hour
The amount of machine-hours used on Job K368 = 160 machine-hours
Therefore, the amount of overhead applied in the Machining Department to Job K368 = Machine-hours used x Predetermined overhead rate = 160 machine-hours x $4.00 per machine-hour = $640.00
Adding the $624.00 of direct materials and direct labor, the total cost of Job K368 is $1,264.00.

Malakan Corporation Has Two Production Departments, Machining and Finishing