Tancredi Corporation has two manufacturing departments--Machining 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 E and Job J.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.If both jobs are sold during the month,the company's cost of goods sold for the month would be closest to:

Question

Tancredi Corporation has two manufacturing departments--Machining 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 E and Job J.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.If both jobs are sold during the month,the company's cost of goods sold for the month would be closest to:

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Machining
 11ea7761_1923_7aa6_81a5_7b4061048b2c_TB2580_00 Customizing
 11ea7761_1923_7aa7_81a5_8b9f6f6d9f2d_TB2580_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($31,000 + $26,500 = $57,500) to calculate the plantwide predetermined overhead rate as follow:
 11ea7761_1923_a1b8_81a5_65db8a383df3_TB2580_00 The overhead applied to Job E is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $5.75 per MH x (3,400 MHs + 2,000 MHs)
= $5.75 per MH x (5,400 MHs)
= $31,050
Job E's manufacturing cost:
 11ea7761_1923_a1b9_81a5_433f18173aa2_TB2580_00 The overhead applied to Job J is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $5.75 per MH x (1,600 MHs + 3,000 MHs)
= $5.75 per MH x (4,600 MHs)
= $26,450
Job J's manufacturing cost:
 11ea7761_1923_c8ca_81a5_5578cbc08461_TB2580_00 11ea7761_1923_c8cb_81a5_fdccf729560e_TB2580_00

Tancredi Corporation Has Two Manufacturing Departments--Machining and Customizing