Question

Sanderlin Corporation has two manufacturing departments--Machining and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

	Machining		Finishing		Total
Estimated total machine-hours (MHs)		5,000		5,000		10,000
Estimated total fixed manufacturing overhead cost	$	26,500	$	13,500	$	40,000
Estimated variable manufacturing overhead cost per MH	$	2.00	$	3.00

During the most recent month, the company started and completed two jobs--Job C and Job L. There were no beginning inventories. Data concerning those two jobs follow:

	Job C		Job L
Direct materials	$	12,500	$	8,200
Direct labor cost	$	20,200	$	6,400
Machining machine-hours		3,400		1,600
Finishing machine-hours		2,000		3,000

Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. The manufacturing overhead applied to Job L is closest to: (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-06-28, 2017-08-01

Multiple Choice

$29,900

$11,680

$28,780

$17,100

Answer 1

Answer is $ 28,780

The explanation is as follows:

Overhead rate for both the department:
Fixed rate for machining: $ 26500 /5,000 = $ 5.30 per hour
Fixed Finishing rate: $ 13500 /5,000 = $ 2.70 per hour
Total rate for machining : $ 2.00+5.30 = $7.30 per hour
Total rate for Finishing: $ 3.00 + 2.70 = $ 5.70 per hour
Overheads applied to Job l:
Machining overheads (1600 hours@ 7.30)			11680
Finishing (3,000 hours@$5.70)			17100
Total overhead applied to Job L			28780