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 $555,000, variable manufacturing overhead of $2.10 per machine-hour, and 74,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed:

Number of units in the job 20
Total machine hours 80
Direct materials $500
Direct labor cost $2,160
The amount of overhead applied to job A496 is closes to____.
A) $1,256.
B) $632.
C) $944.
D) $312.

Answer 1

Allocated MOH= $768

Step-by-step explanation:

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= (555,000/74,000) + 2.1

Predetermined manufacturing overhead rate= $9.6 per machine hour

Now, we can allocate overhead to Job A496:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 9.6*80

Allocated MOH= $768