Question

Ahlheim Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department’s predetermined overhead rate is based on machine-hours and the Assembly 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:

	Forming		Assembly
Machine-hours		16,000		15,000
Direct labor-hours		2,000		6,000
Total fixed manufacturing overhead cost	$	102,400	$	55,200
Variable manufacturing overhead per machine-hour	$	2.30
Variable manufacturing overhead per direct labor-hour			$	4.50

During the current month the company started and finished Job T924. The following data were recorded for this job:

Job T924:	Forming		Assembly
Machine-hours		70		20
Direct labor-hours		30		40
Direct materials	$	870	$	385
Direct labor cost	$	630	$	840

The estimated total manufacturing overhead for the Assembly Department is closest to:

Multiple Choice

• $27,000

• $82,200

• $55,200

• $47,700

Answer 1

Answer : $ 82,200

Estimated Manufacturing overhead = Fixed Manufacturing overhead + ( overhead *Direct labor hours)

Estimated Manufacturing overhead

= 55,200+(4.50*6000)= 55,200+27,000 =$ 82,200 (Answer)