Question

# Morataya Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the...

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:

 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

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:

 Job B Job G Direct materials \$ 14,800 \$ 8,300 Direct labor cost \$ 22,000 \$ 8,900 Machining machine-hours 4,800 2,200 Assembly machine-hours 1,200 1,800

Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job B is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• \$31,392

• \$27,480

• \$39,240

• \$7,848

 Machining: Estimated fixed mfg overhead 39200 Estimated variable mfg overhead [1.90 x 7000] 13300 Estimated total mfg overhead 52500 Assembly: Estimated fixed mfg overhead 6600 Estimated variable mfg overhead [2.10 x 3000] 6300 Estimated total mfg overhead 12900

Total mfg overhead = 52500 + 12900 = 65400

Thus, predetermined overhead rate = Total mfg overhead/ total machine hrs

= 65400/ 10000

= \$6.54 per machine hr

Overhead rate applied to Job B

= predetermined overhead rate x Machine hrs incurred by Job B

= 6.54 x 6000

= 39240 i.e. Option C