Marciante Corporation has two production departments, Casting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting 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: The estimated total manufacturing overhead for the Casting Department is closest to:

Question

Marciante Corporation has two production departments, Casting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting 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:  The estimated total manufacturing overhead for the Casting Department is closest to:

Quizplus · Accepted Answer

The predetermined overhead rate for the Casting Department is calculated as follows: 
$134,300 / 19,000 machine-hours = $7.06 per machine-hour. 
Therefore, the estimated total manufacturing overhead for the Casting Department is: $7.06 per machine-hour x 54,800 machine-hours = $387,248, which is closest to option B.

Marciante Corporation Has Two Production Departments, Casting and Finishing