Heroux Corporation has two manufacturing departments--Forming 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 A and Job H. 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 H is closest to: (Round your intermediate calculations to 2 decimal places.)

Question

Heroux Corporation has two manufacturing departments--Forming 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 A and Job H. 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 H is closest to: (Round your intermediate calculations to 2 decimal places.)

Quizplus · Accepted Answer

To calculate the overhead rate, we need to add up the total estimated overhead for each department and divide by the total estimated machine hours for both departments.

Total estimated overhead for Forming department = $90,000 
Total estimated overhead for Customizing department = $171,000 
Total estimated machine hours for Forming department = 6,000 
Total estimated machine hours for Customizing department = 12,000

Predetermined overhead rate = (90,000 + 171,000) / (6,000 + 12,000) = $19 per machine hour

Using this rate, we can calculate the overhead applied to each job:

Job A: 
Direct materials = $2,000 
Direct labor = $4,000 
Machine hours = 60 
Applied overhead = 60 x $19 = $1,140 
Total cost = $2,000 + $4,000 + $1,140 = $7,140

Job H: 
Direct materials = $10,000 
Direct labor = $6,000 
Machine hours = 320 
Applied overhead = 320 x $19 = $6,080 
Total cost = $10,000 + $6,000 + $6,080 = $22,080

Therefore, the amount of manufacturing overhead applied to Job H is closest to $30,888 ($22,080 x 1.4).

Heroux Corporation Has Two Manufacturing Departments--Forming and Customizing