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 30,000 Total fixed manufacturing overhead cost $ 252,000 Variable manufacturing overhead per machine-hour $ 2.10 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 675 Direct labor cost $ 1,050 The estimated total manufacturing overhead is closest to:

Answer 1

Total variable overhead estimated=(30,000*2.1)=$63,000

Total overhead estimated=Total variable overhead estimated+Total fixed overhead estimated

=63,000+252,000=$315,000

Hence predetermined overhead rate=Total overhead estimated/Total machine-hours estimated

=$315,000/30,000=$10.5/machine hour

Hence applied overhead=(10.5*30)=$315

Hence  estimated total manufacturing overhead=Direct materials +Direct labor cost+applied overhead

=(675+1050+315)

=$2040.