Kaustic Corporation uses a job-order costing system with a single plantwide pred
ID: 2343016 • Letter: K
Question
Kaustic 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 total fixed manufacturing overhead cost of $237,000, variable manufacturing overhead of $3.90 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job B488 which was recently completed:
Number of units in the job 20
Total machine-hours 80
Direct materials $ 500
Direct labor cost $ 2,160
The amount of overhead applied to Job B488 is closest to:
Explanation / Answer
Answer
A
Manufacturing Overhead [Fixed]
$ 237,000.00
B
Machine hours
30,000
C = A/B
Fixed overhead allocation rate
$ 7.90 per machine hour
D
Variable Overhead allocation rate
$ 3.90 per machine hour
E = C+D
Predetermined Overhead rate
$ 11.80 per machine hour
F
No. of machine hours for Job B488
80
G = E x F
Amount of Overhead applied to Job B 488 = ANSWER
$ 944.00 = ANSWER [ 80 machine hours x $ 11.80 per machine hour]
A
Manufacturing Overhead [Fixed]
$ 237,000.00
B
Machine hours
30,000
C = A/B
Fixed overhead allocation rate
$ 7.90 per machine hour
D
Variable Overhead allocation rate
$ 3.90 per machine hour
E = C+D
Predetermined Overhead rate
$ 11.80 per machine hour
F
No. of machine hours for Job B488
80
G = E x F
Amount of Overhead applied to Job B 488 = ANSWER
$ 944.00 = ANSWER [ 80 machine hours x $ 11.80 per machine hour]
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