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 200,000 $ 2,800,000 $ 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 $3,200. The following information was available with respect to this job Direct materials Direct labor cost Machine-hours used $ 1,472 $ 1,056 79

Answer 1

1) Plantwide overhead rate = total overhead cost/machine hours
Total overhead cost = variable manufacturing cost+fixed manufacturing cost
total overhead cost = (200000*2)+2800000 = 3200000
Plantwide overhead rate = 3200000/200000 = 16 Per MH
2) Total manufacturing cost assigned to job P90
Direct materials				1472
Direct labor cost				1056
overhead applied (79*16)				1264
total manufacturing cost				3792

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