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Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling 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:

Milling Customizing
Machine-hours 18,000 13,000
Direct labor-hours 4,000 7,000
Total fixed manufacturing overhead cost $ 113,400 $ 64,400
Variable manufacturing overhead per machine-hour $ 1.60
Variable manufacturing overhead per direct labor-hour $ 3.90

During the current month the company started and finished Job A319. The following data were recorded for this job:

Job A319: Milling Customizing
Machine-hours 60 10
Direct labor-hours 20 60
Direct materials $ 655 $ 305
Direct labor cost $ 400 $ 1,200The amount of overhead applied in the Milling Department to Job A319 is closest to:
A. $552.00
B. $474.00
C. $142,200.00
D. $96.00​

User AlfeG
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1 Answer

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Final answer:

The amount of overhead applied to Job A319 in the Milling Department is $474.00, which is calculated by using the predetermined overhead rate of $7.90 per machine-hour applied to 60 machine-hours.

Step-by-step explanation:

To calculate the amount of overhead applied in the Milling Department to Job A319, we need to first determine the predetermined overhead rate for the department. This is done using the given estimates at the beginning of the year.

The Milling Department's predetermined overhead rate is computed as follows:

Total estimated fixed manufacturing overhead + (Variable manufacturing overhead per machine-hour × Total estimated machine-hours)

$113,400 + ($1.60 × 18,000 machine-hours) = $113,400 + $28,800 = $142,200

Now we divide the total estimated overhead by the total estimated machine-hours to get the overhead rate per machine-hour:

$142,200 / 18,000 machine-hours = $7.90 per machine-hour

Next, we use the overhead rate to calculate the overhead applied to Job A319:

$7.90 per machine-hour × 60 machine-hours used for Job A319 = $474.00

Therefore, the correct answer is B. $474.00.

User Kirk Broadhurst
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