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 G is closest to:
A) $14,388
B) $26,160
C) $11,772
D) $18,320

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 G is closest to:
A) $14,388 
B) $26,160 
C) $11,772 
D) $18,320

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Machining
 11ea7761_1932_e45c_81a5_61f1e2678274_TB2580_00 Assembly
 11ea7761_1933_0b6d_81a5_d1decc2e69a9_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_1933_0b6e_81a5_1395281012b2_TB2580_00 The overhead applied to Job G 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 (2,200 MHs + 1,800 MHs)
= $6.54 per MH x (4,000 MHs)
= $26,160

Morataya Corporation Has Two Manufacturing Departments--Machining and Assembly