Figure 4-4
Mannitou Company made the following predictions for 2016: Job A2 (which was started and completed in June) used 3,000 direct labor hours, 2,000 machine hours, and $57,000 of prime costs.
-Refer to Figure 4-4. If factory overhead is applied based on machine hours, the cost of Job A2 for the Mannitou Company is
A) $69,000.
B) $75,000.
C) $63,000.
D) $66,000.

Question

Figure 4-4
Mannitou Company made the following predictions for 2016:  Job A2 (which was started and completed in June) used 3,000 direct labor hours, 2,000 machine hours, and $57,000 of prime costs.
-Refer to Figure 4-4. If factory overhead is applied based on machine hours, the cost of Job A2 for the Mannitou Company is
A) $69,000. 
B) $75,000. 
C) $63,000. 
D) $66,000.

Quizplus · Accepted Answer

To calculate the cost of Job A2, we need to apply overhead based on machine hours. 
Overhead rate = Estimated Overhead costs / Estimated Machine hours = $84,000 / 40,000 machine hours = $2.10 per machine hour
So, the overhead cost for Job A2 = 2,000 machine hours * $2.10 per machine hour = $4,200
Total cost of Job A2 = Direct labor cost + Direct materials cost + Overhead cost
= $57,000 + $0 + $4,200
= $61,200
Therefore, the correct answer is C) $63,000.

Figure 4-4 Mannitou Company Made the Following Predictions for 2016: Job