Question

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 32,300 Total fixed manufacturing overhead cost $ 581,400 Variable manufacturing overhead per machine-hour $ 2.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 40 Direct materials $ 630 Direct labor cost $ 1,260 The amount of overhead applied to Job T687 is closest to:

Multiple Choice

• $800.00

• $581.40

• $907.60

• $160.00

Answer 1

Compute Total Overhead Estimated as follows: Total Overhead Estimated=Total (variable+fixed) overhead estimated =(32,300 Mhrs $2)+$581,400 = $646.000 Compute Predetermined overhead rate as follows: Total overhead estimated Predetermined overhead rate= Total machine hours $646.000 32,300 = S20per machine hours Therefore, Total overhead applied = 40 $20 = 15800 Hence, the correct option is $800