Question

# Mahon Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system...

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 14,000 12,000 Direct labor-hours 5,000 6,000 Total fixed manufacturing overhead cost \$ 112,000 \$ 48,000 Variable manufacturing overhead per machine-hour \$ 2.80 Variable manufacturing overhead per direct labor-hour \$ 5.60

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 70 50 Direct labor-hours 10 100

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

Multiple Choice

• \$1,360.00

• \$480.00

• \$960.00

• \$81,600.00

The amount of overhead applied in the customized department to job T 138 is 1360.00 dollars.

Which is explained below in detail:

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