Nielsen 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 F 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 F is closest to:
A) $13,000
B) $20,400
C) $45,130
D) $11,730

Question

Nielsen 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 F 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 F is closest to:
A) $13,000 
B) $20,400 
C) $45,130 
D) $11,730

Quizplus · Accepted Answer

To calculate the predetermined overhead rate, we add the machine hours in both departments and divide the total estimated overhead by the total machine hours.

Predetermined overhead rate = (Estimated total overhead costs) / (Estimated total machine hours)

Predetermined overhead rate = ($326,000 + $274,400) / (8,000 + 15,000) = $600 / machine hour

Using this overhead rate, we can calculate the total manufacturing cost assigned to each job:

Total manufacturing cost of Job F = Direct materials + Direct labor + Manufacturing overhead

Total manufacturing cost of Job F = $5,400 + $6,600 + ($900/machine hour x 5 machine hours)

Total manufacturing cost of Job F = $5,400 + $6,600 + $4,500 = $16,500

Therefore, the closest answer is C) $45,130.

Nielsen Corporation Has Two Manufacturing Departments--Machining and Assembly