Question

Baldwin Printing Company uses a job order costing system and applies overhead based on machine hours. A total of 150,000 machine hours have been budgeted for the year. During the year, an order for 1,000 units was completed and incurred the following:"Direct material costs $1,000Direct labor costs 1,500Actual overhead 1,980Machine hours 450The accountant calculated the inventory cost of this order to be $4.30 per unit. The annual budgeted overhead in dollars was;__________a) $577,500b) $600,000c) $645,000d) $660,000

Answer 1

total estimated overhead costs for the period= $600,000

Step-by-step explanation:

First, we need to determine the allocated overhead for the order:

Total cost= direct material + direct labor + allocated overhead

4,300= 1,000 + 1,500 + allocated overhead

allocated overhead= 4,300 - 1,000 - 1,500

allocated overhead= 1,800

Now, we can determine the allocation rate:

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

1,800= Estimated manufacturing overhead rate*450

1,800/450= Estimated manufacturing overhead rate

Estimated manufacturing overhead rate= $4 per machine hour

Finally, the budgeted manufacturing overhead:

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

4= total estimated overhead costs for the period/150,000

$600,000= total estimated overhead costs for the period