Question

Harootunian 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		80,000
Total fixed manufacturing overhead cost	$	312,000
Variable manufacturing overhead per machine-hour	$	2.10

Recently, Job T629 was completed with the following characteristics:

Number of units in the job		50
Total machine-hours		200

The amount of overhead applied to Job T629 is closest to:

Multiple Choice

• $1,620

• $780

• $1,200

• $420

Answer 1

Answer :$1200(explanation below)

Estimated total Manufacturing OVERHEAD cost = estimated total fixed Manufacturing overhead cost +(estimated variable Manufacturing OVERHEAD per machine hour × estimated total machine hours)

= $312000+($2.10×80000) =$312000+$168000 = $480000

Pre determined OVERHEAD rate= estimated total Manufacturing OVERHEAD cost/estimated total machine hours

= $480000/80000= $6

Amount of overhead appiled to job T629 = pre determined OVERHEAD rate × total machine hours

= $6×200 = $1200

Amount of overhead appiled to job T629 = $1200

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