Question

Muldorf, Inc. has two manufacturing departments, Forming and Assembly. The company applies manufacturing overhead to jobs using a predetermined rate based on machine hours in the Forming Department and on direct labor hours in the Assembly Department. Information used to compute predetermined rates is given below:

	Forming	Assembly
Estimated total manufacturing overhead cost	$325,000	$200,000
Estimated machine hours	100,000	50,000
Estimated direct labor hours	25,000	80,000

Job 99 required 400 machine hours in the Forming Department and 200 direct labor hours in the Assembly Department. The amount of manufacturing overhead applied to Job 99 in the Forming Department is:

	a.	$1,300
	b.	$5,200
	c.	$   800
	d.	$   500

Answer 1

a) $1300

Explanation:

Predetermined overhead rate in forming department = total manufacturing overhead cost/total machine hours = $325,000/100,000=$3.25 per machine hour

It is specifically asked in the question about the overhead applied to job 99 only for the forming department.

Therefore, overhead = predetermined overhead rate in the forming department x machine hours used in job 99 = $3.25 x 400 = $1300