Wood Manufacturing is a small textile manufacturer using machine-hours as the si

Question

Wood Manufacturing is a small textile manufacturer using machine-hours as the single, plant-wide predetermined cost driver rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winield High School band jacket job CompanyWinfield High School Job $1,000 200 Dvrect materials Direct labor Manufacturing overhead costs $40,000 $10,000 $30,000 100,000 Machine-hours 900 What are the total manufacturing costs of this job? OA. $1,200 O B. $1,920 O C. $1,470 O D. $1,650

Explanation / Answer

C. $ 1,470

Working:

Step-1:Calculation of overhead rate Overhead rate based on machine hours as activity driver = Estimated Manufacturing Overhead / Estimated Machine hours = $       30,000 /        1,00,000 = $            0.30 Per Machine hour Step-2:Calculation of Overhead assigned to Job Overhead assigned to Job = Machine hours of Job x Oevrhead rate = 900 x $       0.30 Per Machine hour = $ 270 Step-3:Calculation of Total Manufacturing Cost of Job Direct Materials $          1,000 Direct Labor $ 200 Manufacturing Overhead $ 270 Total Manufacturing cost $          1,470

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