Morataya Corporation has two manufacturing departments--Machining and Assembly. 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 B and Job G. 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 amount of manufacturing overhead applied to Job B is closest to:
A) $31,392
B) $27,480
C) $39,240
D) $7,848

Question

Morataya Corporation has two manufacturing departments--Machining and Assembly. 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 B and Job G. 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 amount of manufacturing overhead applied to Job B is closest to:
A) $31,392 
B) $27,480 
C) $39,240 
D) $7,848

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Machining
 11ea7761_1932_6f29_81a5_79df9c2ab199_TB2580_00 Assembly
 11ea7761_1932_963a_81a5_e75096014d09_TB2580_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($52,500 + $12,900 = $65,400) to calculate the plantwide predetermined overhead rate as follow:
 11ea7761_1932_963b_81a5_f9e1cd14053b_TB2580_00 The overhead applied to Job B is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $6.54 per MH x (4,800 MHs + 1,200 MHs)
= $6.54 per MH x (6,000 MHs)
= $39,240

Morataya Corporation Has Two Manufacturing Departments--Machining and Assembly