Ahlheim Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
During the current month the company started and finished Job T924. The following data were recorded for this job:

-The estimated total manufacturing overhead for the Forming Department is closest to:
A) $36,800
B) $102,400
C) $309,867
D) $139,200

Question

Ahlheim Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
  During the current month the company started and finished Job T924. The following data were recorded for this job:
 
-The estimated total manufacturing overhead for the Forming Department is closest to:
A) $36,800 
B) $102,400 
C) $309,867 
D) $139,200

Quizplus · Accepted Answer

Forming Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $102,400 + ($2.30 per machine-hour × 16,000 machine-hours)
= $102,400 +$36,800 = $139,200

Ahlheim Corporation Has Two Production Departments, Forming and Assembly