Question

Question 1 Crane Church Furniture manufactures custom pews, altars, and pulpits for churches across the southern United States. Since each order is unique, Crane uses a job order costing system. During the month of June, Crane worked on orders for three churches: Faith Church, Grace Church, and Hope Church. Production on the Faith and Grace orders began in May and ended in June. Production on the Hope order began in June and was incomplete at the end of the month. Crane applies overhead to each job based on machine hours. Prior to the year, managers had estimated manufacturing overhead at $1,100,000, along with 44,000 machine hours. Additional cost information related to the three orders is as follows: Hope Beginning balance, June 1 Direct materials, June Direct labor, June Manufacturing OH, June Machine hours, June Faith $4,800 $4,700 $2,300 ? 3,900 Grace $1,900 $7,000 $2,600 ? 4,900 $2,750 $1,100 ? 2,270 (a) What is Crane's predetermined overhead rate? Predetermined overhead rate / machine hour

Answer 1

Estimated Manufacturing overhead = $1,100,000

Estimated machine hours = 44,000

Predetermined overhead rate = Estimated Manufacturing overhead /Estimated machine hours

= 1,100,000/44,000

= $25 per machine hour

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