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 165,000 $ 1,980,000 $ 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 $2,500. The following information was available with respect to this job: Direct materials Direct labor coat Machine-hours used $ 1,150 $ 830 72 Compute the total manufacturing cost assigned to Job P90. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the plantwide predetermined overhead rate. Predetermined overhead rate per MH Required 2 >

Answer 1

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1. Predetermined rate = Estimated overheads/Estimated Machine hours + Variable rate per hour
= (1980000/165000 )+2
= 14 Per machine Hour
2.

Cost Assigned to P90 will be as follows:
Direct Material	1150
Direct Labor	830
Overhead Applied 72*14	1008
Total Manufacturing Cost	2988