Question

Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per machine-hour 165,000 $ 1,980,000 2.00 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job P90 was started, completed, and sold to the customer for $2,500. The following information was available with respect to this job: Direct materials Direct labor cost Machine-hours used $ 1,150 $ 830 72 Compute the total manufacturing cost assigned to Job P90. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the plantwide predetermined overhead rate. Predetermined overhead rate per MH

Answer 1

Answer -

1. Answer -

Predetermined overhead rate = $14 per MH

Calculation:

Here,

Plantwide predetermined overhead rate based on machine-hours.

So,

Estimated machine-hours = 165000 machine-hours

Fixed manufacturing overhead cost = $1980000

Variable manufacturing overhead cost = ($2 per MH * 165000 machine-hours) = $330000

Therefore,

Predetermined overhead rate:

= [Fixed manufacturing overhead cost + Variable manufacturing overhead cost] / Estimated machine-hours

= [$1980000 + $330000] / 165000 machine-hours

= $14 per machine-hour

2. Answer -

Direct materials	$1150
Direct labor	$830
Overhead applied	$1008
Total manufacturing cost	$2988

Calculation:

Overhead applied = Machine-hours used * Predetermined overhead rate

Overhead applied = [72 machine-hours * $14 per machine-hour]

Overhead applied = $1008

So,

Total manufacturing cost = Direct materials + Direct labor + Overhead applied

Total manufacturing cost = $1150 + $830 + $1008

Total manufacturing cost = $2988