Pebbles Corporation has two manufacturing departments--Casting and Finishing.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 L.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 total manufacturing cost assigned to Job L is closest to:

Question

Pebbles Corporation has two manufacturing departments--Casting and Finishing.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 L.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 total manufacturing cost assigned to Job L is closest to:

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Casting
 11ea7761_1925_2861_81a5_4f24c381fecb_TB2580_00 Finishing
 11ea7761_1925_2862_81a5_75ca3f6e27c3_TB2580_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($13,800 + $13,500 = $27,300) to calculate the plantwide predetermined overhead rate as follow:
 11ea7761_1925_4f73_81a5_872013cc65e4_TB2580_00 The overhead applied to Job L is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $5.46 per MH x (600 MHs + 1,800 MHs)
= $5.46 per MH x (2,400 MHs)
= $13,104
Job L's manufacturing cost:
 11ea7761_1925_4f74_81a5_2b19a1014034_TB2580_00

Pebbles Corporation Has Two Manufacturing Departments--Casting and Finishing