Pebbles Corporation has two manufacturing departments--Casting and Finishing. Th

Question

Pebbles Corporation has two manufacturing departments--Casting and Finishing. 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 A and Job L. There were no beginning inventories. Data concerning those two jobs follow:

Assume that the company uses a plantwide predeterminedmanufacturing overhead rate based on machine-hours. The total manufacturing cost assigned to Job L is closest to:.

Casting Finishing Total Estimated total machine-hours (MHs) 2,000 3,000 5,000 Estimated total fixed manufacturing overhead cost $ 9,800 $ 6,300 $ 16,100 Estimated variable manufacturing overhead cost per MH $ 2.00 $ 2.40

Explanation / Answer

Answer : $13104.

Predetermined overhead rate = Total estimated manufacturing overhead / Total estimated machine hours

= [(2000 * $2 + 3000 * $2.40) + $16100] / 5000 hours

= $5.46.

Total manufacturing cost of job L is = 2400 hours * $5.46

= $13104.

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