Question

Eisentrout Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department’s predetermined overhead rate is based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Machining Customizing Machine-hours 27,000 18,000 Direct labor-hours 7,000 6,000 Total fixed manufacturing overhead cost $ 145,800 $ 18,600 Variable manufacturing overhead per machine-hour $ 1.80 Variable manufacturing overhead per direct labor-hour $ 3.10 During the current month the company started and finished Job T272. The following data were recorded for this job: Job T272: Machining Customizing Machine-hours 40 30 Direct labor-hours 30 30 The estimated total manufacturing overhead for the Machining Department is closest to:

A. 194,400

B. 145,800

C. 48,600

D. 178,200

Answer 1

	The Machining Department’s predetermined overhead rate is based on machine-hours
	Estimated total manufacturing overhead:
							$
	Fixed						145800
	Variable			(27000*1.8)			48600
	(Estimated machine hours*Variable rate of overhead)
	Estimated total manufacturing overhead						194400
	Aswer is A. $ 194400
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