Question

Heroux Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

Forming Customizing Total
Estimated total machine-hours (MHs) 3,000 7,000 10,000
Estimated total fixed manufacturing overhead cost $16,500 $20,300 $36,800
Estimated variable manufacturing overhead cost per MH $1.70 $2.50

During the most recent month, the company started and completed two jobs--Job A and Job H. There were no beginning inventories. Data concerning those two jobs follow:

Job A Job H
Direct materials $12,800 $6,700
Direct labor cost $24,300 $7,800
Forming machine-hours 2,000 1,000
Customizing machine-hours 2,800 4,200

Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job H is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

To calculate the manufacturing overhead applied to Job H, we need to use the predetermined overhead rates for each department and the machine-hours used. The manufacturing overhead applied to Job H is $17,680.

Step-by-step explanation:

To calculate the predetermined manufacturing overhead rate based on machine-hours, we need to calculate the total estimated manufacturing overhead costs and total estimated machine-hours for each department.

For the Forming department, the total estimated manufacturing overhead cost is $16,500 and the estimated total machine-hours are 3,000. Therefore, the predetermined overhead rate for Forming is $16,500 / 3,000 hours = $5.50 per machine-hour.

For the Customizing department, the total estimated manufacturing overhead cost is $20,300 and the estimated total machine-hours are 7,000. Therefore, the predetermined overhead rate for Customizing is $20,300 / 7,000 hours = $2.90 per machine-hour.

To calculate the amount of manufacturing overhead applied to Job H, we need to know the machine-hours used for each department. Job H used 1,000 machine-hours in the Forming department and 4,200 machine-hours in the Customizing department. Using the predetermined overhead rates, the manufacturing overhead applied to Job H is calculated as:

Forming department: 1,000 hours x $5.50 per hour = $5,500

Customizing department: 4,200 hours x $2.90 per hour = $12,180

The total manufacturing overhead applied to Job H is $5,500 + $12,180 = $17,680.