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Asked by Kunwar Singh on Jun 02, 2024

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Eisentrout Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Eisentrout Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: During the current month the company started and finished Job T272. The following data were recorded for this job: The predetermined overhead rate for the Customizing Department is closest to: A) $3.30 per direct labor-hour B) $12.70 per direct labor-hour C) $9.40 per direct labor-hour D) $4.76 per direct labor-hour During the current month the company started and finished Job T272. The following data were recorded for this job:
Eisentrout Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: During the current month the company started and finished Job T272. The following data were recorded for this job: The predetermined overhead rate for the Customizing Department is closest to: A) $3.30 per direct labor-hour B) $12.70 per direct labor-hour C) $9.40 per direct labor-hour D) $4.76 per direct labor-hour The predetermined overhead rate for the Customizing Department is closest to:

A) $3.30 per direct labor-hour
B) $12.70 per direct labor-hour
C) $9.40 per direct labor-hour
D) $4.76 per direct labor-hour

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or jobs, based on a predetermined formula, prior to actual production.

Customizing Department

A division within a company that modifies products to meet specific requirements or preferences of customers.

Direct Labor-Hours

A measure of the time directly spent by workers on producing a product or delivering a service, often used to allocate manufacturing overhead.

  • Determine calculated overhead rates for different manufacturing sections.
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ME
Menna ElsaoudyJun 09, 2024
Final Answer :
B
Explanation :
To calculate the predetermined overhead rate for the Customizing Department, we need to use the following formula:

Predetermined Overhead Rate = Estimated Overhead / Estimated Direct Labor Hours

We are given the estimated overhead for the Customizing Department as $258,400 and the estimated direct labor hours as 20,800. Plugging these numbers into the formula, we get:

Predetermined Overhead Rate = $258,400 / 20,800 = $12.50 per direct labor-hour

Therefore, the closest answer choice is B, which is $12.70 per direct labor-hour.

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