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:
A)$61,450
B)$41,150
C)$110,808
D)$102,600

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:
A)$61,450 
B)$41,150 
C)$110,808 
D)$102,600

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Machining 11ea7998_5f56_42cb_911b_3f474d1961b0_TB2627_00_TB2627_00 Customizing 11ea7998_5f56_69dc_911b_676d6930deee_TB2627_00_TB2627_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: 11ea7998_5f56_69dd_911b_5146d0cb583f_TB2627_00_TB2627_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: 11ea7998_5f56_90ee_911b_1b4394afbb9a_TB2627_00_TB2627_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: 11ea7998_5f56_b7ff_911b_2508f23905c4_TB2627_00_TB2627_00 11ea7998_5f56_df10_911b_e52091bcbc90_TB2627_00_TB2627_00

Tancredi Corporation Has Two Manufacturing Departments--Machining and Customizing