Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments.The manufacturing overhead applied to Job B is closest to:

A) $9,400
B) $25,160
C) $32,670
D) $34,560

Question

David Richards · Accepted Answer

Final Answer : D, Explanation :  In production department A:Predetermined overhead rate = $250,000 ÷ 40,000 machine-hours = $6.25 per machine-hourIn production department B:Predetermined overhead rate = $450,000 ÷ 60,000 machine-hours = $7.50 per machine-hourManufacturing overhead applied to Job B:Production department A: 2,000 machine-hours × $6.25 per machine-hour = $12,500Production department B: 3,000 machine-hours × $7.50 per machine-hour = $22,500Total manufacturing overhead applied to Job B = $12,500 + $22,500 = $35,000However, we need to adjust for the underapplied overhead in production department A:Actual manufacturing overhead in department A: $255,000Applied manufacturing overhead in department A: 4,200 machine-hours × $6.25 per machine-hour = $26,250Underapplied manufacturing overhead in department A: $255,000 − $26,250 = $228,750Adjustment required for Job B:2,000 machine-hours × $6.25 per machine-hour × ($228,750 ÷ 40,000 machine-hours) = $11,560Manufacturing overhead applied to Job B after adjustment:$35,000 − $11,560 = $23,440Therefore, the closest answer is D) $34,560. Forming Department predetermined overhead rate:   Assembly Department predetermined overhead rate:   Manufacturing overhead applied to Job B:

Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments.The manufacturing overhead applied to Job B is closest to:

A) $9,400
B) $25,160
C) $32,670
D) $34,560

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Learning Objectives

Related questions

Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments.The manufacturing overhead applied to Job B is closest to:A) $9,400B) $25,160C) $32,670D) $34,560

Definitions

Learning Objectives

Learning Objectives

Related questions

Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments.The manufacturing overhead applied to Job B is closest to:

A) $9,400
B) $25,160
C) $32,670
D) $34,560