Morataya Corporation has two manufacturing departments--Machining and Assembly.

Question

Morataya Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

During the most recent month, the company started and completed two jobs--Job B and Job G. There were no beginning inventories. Data concerning those two jobs follow:

Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That predetermined manufacturing overhead rate is closest to:

$4.00

$7.50

$4.58

$6.54

Machining Assembly Total Estimated total machine-hours (MHs) 7,000 3,000 10,000 Estimated total fixed manufacturing overhead cost $ 39,200 $ 6,600 $ 45,800 Estimated variable manufacturing overhead cost per MH $ 1.90 $ 2.10

Explanation / Answer

Estimated total fixed manufacturing overhead cost = 45,800

Estimated total machine-hours (MHs)   = 10000

Estimated fixed manufacturing overhead per hour = 45800/10000 = $4.58

Predetermined manufacturing overhead rate   = $4.58 Answer

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