Question

MillingCustomizing Machine-hours17,00013,000 Direct labor-hours2,0005,000 Total fixed manufacturing overhead cost$119,000$42,000 Variable manufacturing overhead per machine-hour$ 1.60 Variable manufacturing overhead per direct labor-hour $ 4.30 During the current month the company started and finished Job A492. The following data were recorded for this job: Job A492:MillingCustomizing Machine-hours9020 Direct labor-hours2050 The amount of overhead applied in the Milling Department to Job A492 is closest to:

Answer 1

$774

Step-by-step explanation:

Calculation for the amount of overhead applied in the Milling Department to Job A492

First step is to calculate for the Milling Department overhead cost using this formula

Milling Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)

Let plug in the formula

Milling Department overhead cost = $119,000 + ($1.60 per machine-hour × 17,000 machine-hours)

Milling Department overhead cost == $119,000 +$27,200

Milling Department overhead cost = $146,200

Second step is to calculate for the Predetermined overhead rate using this formula

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred

Let plug in the formula

Predetermined overhead rate = $146,200 ÷ 17,000 machine-hours

Predetermined overhead rate = $8.60 per machine-hour

Last step is to calculate for the amount of overhead applied in the Milling Department to Job A492 using this formula

Overhead applied=Predetermined overhead rate × Amount of the allocation base that was incurred by the job

Overhead applied = $8.60 per machine-hour × 90 machine-hours

Overhead applied= $774

Therefore The amount of overhead applied in the Milling Department to Job A492 is closest to: $774