Question

Lupo 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 the following data:

Total machine-hours		30,700
Total fixed manufacturing overhead cost	$	337,700
Variable manufacturing overhead per machine-hour	$	4

Recently, Job T687 was completed with the following characteristics:

Number of units in the job		10
Total machine-hours		20
Direct materials	$	575
Direct labor cost	$	1,150

The amount of overhead applied to Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $337,700 + ($4 per machine-hour × 30,700 machine-hours) = $460,500

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $460,500 ÷ 30,700 machine-hours = $15 per machine-hour

Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $15 per machine-hour × 20 machine-hours = $300