Beat Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours.The company based its predetermined overhead rate for the current year on the following data:
Recently,Job M759 was completed.It required 60 machine-hours.The amount of overhead applied to Job M759 is closest to:
A) $750
B) $516
C) $984
D) $234

Question

Beat Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours.The company based its predetermined overhead rate for the current year on the following data:
 Recently,Job M759 was completed.It required 60 machine-hours.The amount of overhead applied to Job M759 is closest to:
A) $750 
B) $516 
C) $984 
D) $234

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $344,000 + ($3.90 per machine-hour × 40,000 machine-hours) = $344,000 + $156,000 = $500,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $500,000 ÷ 40,000 machine-hours = $12.50 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $12.50 per machine-hour × 60 machine-hours = $750

Beat Corporation Uses a Job-Order Costing System with a Single