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		23,000		23,000
Direct labor-hours		11,000		5,000
Total fixed manufacturing overhead cost	$	133,400	$	15,500
Variable manufacturing overhead per machine-hour	$	1.50
Variable manufacturing overhead per direct labor-hour			$	4.20

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		50		10
Direct labor-hours		50		60

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

Answer 1

	Machining
Total fixed manufacturing overhead cost	133400
Variable manufacturing overhead	34500	=23000*1.50
Estimated total manufacturing overhead	167900