Question

Harootunian 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 the following data:

Total machine-hours80,000Total fixed manufacturing overhead cost$312,000Variable manufacturing overhead per machine-hour$2.10

Recently, Job T629 was completed with the following characteristics:

Number of units in the job50Total machine-hours200

The predetermined overhead rate is closest to:

a. $8.10 per machine-hour
b. $2.10 per machine-hour
c. $3.90 per machine-hour
d. $6.00 per machine-hour

Answer 1

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Total machine-hours= 80,000

Total fixed manufacturing overhead cost= $312,000

Variable manufacturing overhead per machine-hour= $2.10

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= (312,000/80,000) + 2.10= $6 per machine-hour