Asked by Jahsiah Colon on Apr 29, 2024
Verified
Coble Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated shaper. Additional information is provided below for the most recent month: 
The manufacturing overhead applied is closest to:
A) $16,933
B) $47,100
C) $3,200
D) $40,820
Job-Order Costing
A cost accounting system that calculates the cost of individual jobs or orders, commonly used in custom manufacturing.
Automated Shaper
A machine that uses computer controls to cut and shape materials with precision, often used in manufacturing for consistent and efficient production.
Manufacturing Overhead
Costs associated with manufacturing a product that are not directly tied to the factory's operations.
- Assign overhead expenses to goods using both conventional and activity-based cost accounting methods.
Verified Answer
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total machine hours
Estimated total manufacturing overhead cost = $435,000
Estimated total machine hours = 21,750
Therefore, the predetermined overhead rate = $435,000 ÷ 21,750 = $20 per machine hour
Actual machine hours used = 2,041
Therefore, the manufacturing overhead applied = $20 × 2,041 = $40,820
Thus, the closest answer is D, $40,820.
Learning Objectives
- Assign overhead expenses to goods using both conventional and activity-based cost accounting methods.
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