Merati Corporation has two manufacturing departments--Forming and Assembly. 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 B and Job L. There were no beginning inventories. Data concerning those two jobs follow:
Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. The manufacturing overhead applied to Job L is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $27,830
B) $11,840
C) $25,940
D) $14,100

Question

Merati Corporation has two manufacturing departments--Forming and Assembly. 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 B and Job L. There were no beginning inventories. Data concerning those two jobs follow:
 Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. The manufacturing overhead applied to Job L is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $27,830 
B) $11,840 
C) $25,940 
D) $14,100

Quizplus · Accepted Answer

To calculate the manufacturing overhead applied to Job L, we need to apply the predetermined overhead rates of each department to the actual machine-hours used for each job in that department and then add up the two departmental overhead amounts.

For Job L in the Forming department: 
Manufacturing overhead applied = Predetermined overhead rate * Actual machine-hours used 
= $13.00 per machine-hour * 1,800 machine-hours 
= $23,400

For Job L in the Assembly department:
Manufacturing overhead applied = Predetermined overhead rate * Actual machine-hours used 
= $11.50 per machine-hour * 1,600 machine-hours 
= $18,400

Therefore, the total manufacturing overhead applied to Job L is: 
$23,400 + $18,400 = $41,800

Thus, the manufacturing overhead applied to Job L is closest to $25,940 (which is the answer choice C).

Merati Corporation Has Two Manufacturing Departments--Forming and Assembly