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		31,000
Total fixed manufacturing overhead cost	$	310,000
Variable manufacturing overhead per machine-hour	$	4

Recently, Job T687 was completed with the following characteristics:

Number of units in the job		10
Total machine-hours		30
Direct materials	$	730
Direct labor cost	$	1,460

The amount of overhead applied to Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Estimated machine-hours = 31,000
Estimated variable manufacturing overhead = $4.00 per machine-hour
Estimated fixed manufacturing overhead = $310,000

Estimated manufacturing overhead = Estimated machine-hours * Estimated variable manufacturing overhead + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = 31,000 * $4.00 + $310,000
Estimated manufacturing overhead = $434,000

Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine-hours
Predetermined overhead rate = $434,000 / 31,000
Predetermined overhead rate = $14.00 per machine-hour

Manufacturing overhead applied = Predetermined overhead rate * Actual machine-hours
Manufacturing overhead applied = $14.00 * 30
Manufacturing overhead applied = $420