Harootunian Corporation uses a job-order costing system with a single plantwide

Question

Harootunian Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Recently, Job T629 was completed with the following characteristics:

The predetermined overhead rate is closest to:

Garrison 16e Rechecks 2017-08-01

Multiple Choice

$8.10 per machine-hour

$2.10 per machine-hour

$3.90 per machine-hour

$6.00 per machine-hour

Total machine-hours 80,000 Total fixed manufacturing overhead cost $ 312,000 Variable manufacturing overhead per machine-hour $ 2.10

Explanation / Answer

Predetermined overhead rate = Estimated fixed overhead rate +estimated variable overhea rate

                = [312000/80000] + 2.10

               = 3.9+ 2.1

               = $ 6 per MH

correct option is "D"

**Overhead rate= estimated overhead /estimated machine hours

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