Question

Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department’s predetermined overhead rate is based on machine-hours and the Customizing 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:

	Milling		Customizing
Machine-hours		18,000		13,000
Direct labor-hours		4,000		7,000
Total fixed manufacturing overhead cost	$	113,400	$	64,400
Variable manufacturing overhead per machine-hour	$	1.60
Variable manufacturing overhead per direct labor-hour			$	3.90

During the current month the company started and finished Job A319. The following data were recorded for this job:

Job A319:	Milling		Customizing
Machine-hours		60		10
Direct labor-hours		20		60
Direct materials	$	655	$	305
Direct labor cost	$	400	$	1,200

The amount of overhead applied in the Milling Department to Job A319 is closest to: (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-06-28

Multiple Choice

• $142,200.00

• $552.00

• $96.00

• $474.00

Answer 1

--Correct Answer = Option #4: $ 474.00

		Milling	Customizing
A	Fixed Manufacturing Overhead	$113,400	$64,400
	Allocation base	Machine hours	Labor hours
B	No. of allocation base	18,000	7,000
C = A/B	Fixed Overhead rate	$6.30	$9.20
D	Variable Overhead rate	$1.60	$3.90
E = C+D	Predetermined Overhead rate	$7.90	$13.10
F	Machine hours used by A319	60
G	Labor hours used by A319		60
H = (E x F) and (E x G)	Amount of Overhead applied	$474.00 [Answer]	$786.00