Marciante Corporation has two production departments, Casting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Finishing 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:

-The estimated total manufacturing overhead for the Casting Department is closest to:
A) $387,260
B) $134,300
C) $28,900
D) $105,400

Question

Marciante Corporation has two production departments, Casting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Finishing 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:
 
-The estimated total manufacturing overhead for the Casting Department is closest to:
A) $387,260 
B) $134,300 
C) $28,900 
D) $105,400

Quizplus · Accepted Answer

Casting Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $105,400 + ($1.70 per machine-hour × 17,000 machine-hours)
= $105,400 +$28,900 = $134,300

Marciante Corporation Has Two Production Departments, Casting and Finishing