Harootunian Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:
Recently, Job T629 was completed with the following characteristics:

-The predetermined overhead rate is closest to:
A) $8.10 per machine-hour
B) $2.10 per machine-hour
C) $3.90 per machine-hour
D) $6.00 per machine-hour

Question

Harootunian Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:
  Recently, Job T629 was completed with the following characteristics:
 
-The predetermined overhead rate is closest to:
A) $8.10 per machine-hour 
B) $2.10 per machine-hour 
C) $3.90 per machine-hour 
D) $6.00 per machine-hour

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $312,000 + ($2.10 per machine-hour × 80,000 machine-hours) = $312,000 + $168,000 = $480,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $480,000 ÷ 80,000 machine-hours = $6.00 per machine-hour

Harootunian Corporation Uses a Job-Order Costing System with a Single