Question

Kalp Corporation has two production departments, Machining and Finishing. 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 Finishing 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: Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Machining Finishing 19,000 12,000 2,000 8,000 $136,800 $69,600 $ 1.80 $ 3.20 During the current month the company started and finished Job K928. The following data were recorded for this job: Machining Finishing 90 10 Job K928: Machine-hours Direct labor-hours Direct materials Direct labor cost 30 50 $ 775 $ 630 $ 415 $1,050 The amount of overhead applied in the Machining Department to Job K928 is closest to

Answer 1

Fixed manufacturing overhead rate = $136800/19000 = $7.2 per machine hours total overhead applied to Job K 928 = variable overhead + Fixed overhead

= (1.80+7.20)*90

= $810