Question

Bear Claw Industries uses a job-order costing system. The Molding Department applies overhead based on machine hours, while the Assembly Department applies overhead based on direct labor hours. The company made the following estimates at the beginning of the current year:

Molding Assembly
Manufacturing overhead cost $700,000 $400,000
Machine hours 10,000 4,000
Direct labor hours 12,000 16,000
The following information was available for Job No. 7-29, which was started and completed during August:______.
Job No. 7-29
Molding Assembly
Direct materials $3,500 $ 7,500
Direct labor $9,000 $12,500
Direct labor hours 900 1,250
Machine hours 500 400
The predetermined overhead rate for the molding department is:_____.
a. $50.
b. $70.
c. $100.
d. $83.

Answer 1

Molding= $70 per machine hour

Step-by-step explanation:

Giving the following information:

Molding

Manufacturing overhead cost $700,000

Machine hours 10,000

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

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

Molding= 700,000 / 10,000

Molding= $70 per machine hour