Ronson Corporation has two manufacturing departments--Casting and Customizing. 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 C 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 total manufacturing cost assigned to Job G is closest to:
A) $42,070
B) $27,370
C) $6,800
D) $7,900

Question

Ronson Corporation has two manufacturing departments--Casting and Customizing. 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 C 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 total manufacturing cost assigned to Job G is closest to:
A) $42,070 
B) $27,370 
C) $6,800 
D) $7,900

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Casting
 11ea7761_1940_521d_81a5_5775edffde78_TB2580_00 Customizing
 11ea7761_1940_521e_81a5_2d7374159f96_TB2580_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($36,000 + $23,500 = $59,500) to calculate the plantwide predetermined overhead rate as follow:
 11ea7761_1940_521f_81a5_2f74cc4255bd_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
= $5.95 per MH x (1,600 MHs + 3,000 MHs)
= $5.95 per MH x (4,600 MHs)
= $27,370
Job G's manufacturing cost:
 11ea7761_1940_7930_81a5_0d23a1b41191_TB2580_00

Ronson Corporation Has Two Manufacturing Departments--Casting and Customizing