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:

	Machining	Finishing
Machine-hours	19,000	12,000
Direct labor-hours	2,000	8,000
Total fixed manufacturing overhead cost	$136,800	$69,600
Variable manufacturing overhead per machine-hour	$ 1.80
Variable manufacturing overhead per direct labor-hour		$ 3.20

During the current month the company started and finished Job K928. The following data were recorded for this job:

Job K928:	Machining	Finishing
Machine-hours	90	10
Direct labor-hours	30	50
Direct materials	$775	$ 415
Direct labor cost	$630	$1,050

1. The predetermined overhead rate for the Machining Department is closest to:

Multiple Choice

• $7.20 per machine-hour

• $9.00 per machine-hour

• $21.38 per machine-hour

• $1.80 per machine-hour

2. The amount of overhead applied in the Machining Department to Job K928 is closest to:

Multiple Choice

• $783.00

• $810.00

• $162.00

• $171,000.00

3. The total amount of overhead applied in both departments to Job K928 is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $1,405

• $2,000

• $810

• $595

4. The total job cost for Job K928 is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $810

• $4,275

• $2,060

• $2,215

Answer 1

1. The predetermined overhead rate for the Machining Department is $9 Per Machine Hour.

OH Rate for Machining Department
Total Manuf. OH / Machine Hours
Total Fix Manuf. OH Cost		136800
Variable Manuf. OH Cost	19000*1.8	34200
Total Manuf. OH		171000
Machine Hours		19000
OH Rate for Machining Department		9

2. The amount of overhead applied in the Machining Department to Job K928 is $810.

Overhead applied in the Machining Department to Job K928
OH Rate * Machine hours in Job K298
OH Rate	9
Machine Hours in Job K298	90
OH Applied	810

3. The total amount of overhead applied in both departments to Job K928 is $1405.

Overhead applied in the Machining Department to Job K928	810	Above
overhead applied in the Finishing Department to Job K928	595	Working
Total	1405

Working Note:

OH Rate for Finishing Department
Total Manuf. OH / Machine Hours
Total Fix Manuf. OH Cost		69600
Variable Manuf. OH Cost	12000*3	25600
Total Manuf. OH		95200
Machine Hours		8000
OH Rate for Finishing Department		11.9

overhead applied in the Finishing Department to Job K928
OH Rate * Direct Labor hours in Job K298
OH Rate	11.9
Direct Labor Hours in Job K298	50
OH Applied	595

4. The total job cost for Job K928 is $4275.

Total job cost for Job K928	Machining	Finishing	Total
Direct Materials	775	415	1190
Direct Labor Cost	630	1050	1680
OH Applied	810	595	1405
Total job cost for Job K928			4275