Kostelnik 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 total fixed manufacturing overhead cost of $237,000, variable manufacturing overhead of $3.90 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed: The amount of overhead applied to Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.)

A) $1,256
B) $632
C) $944
D) $312

Question

Kostelnik 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 total fixed manufacturing overhead cost of $237,000, variable manufacturing overhead of $3.90 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed:

The amount of overhead applied to Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.)

A) $1,256
B) $632
C) $944
D) $312

Brittnay White · Accepted Answer

Final Answer : C, Explanation :  The predetermined overhead rate is calculated as follows:Total fixed overhead cost + (Variable overhead rate x Estimated machine hours)= $237,000 + ($3.90 x 30,000)= $237,000 + $117,000= $354,000Predetermined overhead rate = $354,000 / 30,000 machine-hours = $11.80 per machine-hourTo find the amount of overhead applied to Job A496,Overhead applied = Machine-hours x Predetermined overhead rate= 45 machine-hours x $11.80 per machine-hour= $531Therefore, the closest amount of overhead applied to Job A496 is $944, which is option C.

Definitions

Learning Objectives

Learning Objectives

Related questions