Mahon Corporation has two production departments, Casting and Customizing. The c

Question

Mahon Corporation has two production departments, Casting and Customizing. 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 Customizing 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:

Casting Customizing
Machine-hours 17,800 13,800
Direct labor-hours 5,800 6,900
Total fixed manufacturing overhead cost $ 122,820 $ 75,900
Variable manufacturing overhead per machine-hour $ 2.50
Variable manufacturing overhead per direct labor-hour $ 4.90

During the current month the company started and finished Job T138. The following data were recorded for this job:

Job T138: Casting Customizing
Machine-hours 60 40
Direct labor-hours 9 60

The amount of overhead applied in the Customizing Department to Job T138 is closest to: (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-06-22, 2017-08-01

Multiple Choice

a $109,710.00
b $832.00
c $954.00
d $416.00

Explanation / Answer

Option -C $954.00 ............is the final answer

We have compute overhead applied in customizing depratment. So we calculate the overhead rate per DLH ( Direct labour hour). = Variable oh per DLH + Fixed oh per DLH

= 4.90 ( Given) + 75900 / 6900 = 4.90 + 11 = 15.90 per hour

It was given in the last table that 60 direct labour hours booked for the given job in customizing department. So overhead allocated shall be 60 * 15.90 = 954

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.