Opunui Corporation has two manufacturing departments--Molding 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 M. 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 M is closest to:
A) $10,830
B) $7,400
C) $25,730
D) $7,500

Question

Opunui Corporation has two manufacturing departments--Molding 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 M. 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 M is closest to:
A) $10,830 
B) $7,400 
C) $25,730 
D) $7,500

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Molding
 11ea7761_1939_2602_81a5_9d170d0b3376_TB2580_00 Finishing
 11ea7761_1939_4d13_81a5_e79371c9e4cf_TB2580_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($24,000 + $4,500 = $28,500) to calculate the plantwide predetermined overhead rate as follow:
 11ea7761_1939_4d14_81a5_9d088ab0de7c_TB2580_00 The overhead applied to Job M is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $5.70 per MH x (1,300 MHs + 600 MHs)
= $5.70 per MH x (1,900 MHs)
= $10,830
Job M's manufacturing cost:
 11ea7761_1939_7425_81a5_3de3d4df8f02_TB2580_00

Opunui Corporation Has Two Manufacturing Departments--Molding and Finishing