Asked by levana znaty on May 28, 2024
Verified
Heroux Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: During the most recent month, the company started and completed two jobs--Job A and Job H. There were no beginning inventories. Data concerning those two jobs follow:
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 H is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $22,680
B) $30,888
C) $29,880
D) $7,200
Departmental Predetermined Rates
The estimated overhead rates calculated for specific departments within a company to allocate costs appropriately.
Manufacturing Overhead
All indirect factory-related costs incurred during the production process, excluding direct materials and direct labor.
Machine-Hours
A measure of the amount of time machines are utilized during the production process.
- Apply preset rates to assign manufacturing overhead costs to various jobs.
- Outline the variance between plantwide and departmental overhead rates in their effect on product cost determination.
Verified Answer
For the Forming department:
Predetermined overhead rate = $192,000 / 96,000 = $2.00 per machine-hour
Machine-hours used for Job H = 8,000
Manufacturing overhead applied = $2.00 x 8,000 = $16,000
For the Customizing department:
Predetermined overhead rate = $240,000 / 120,000 = $2.00 per machine-hour
Machine-hours used for Job H = 9,000
Manufacturing overhead applied = $2.00 x 9,000 = $18,000
Total manufacturing overhead applied to Job H = $16,000 + $18,000 = $29,880.
Therefore, the closest option is C.
Learning Objectives
- Apply preset rates to assign manufacturing overhead costs to various jobs.
- Outline the variance between plantwide and departmental overhead rates in their effect on product cost determination.
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