Question

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Total machine-hours		32,300
Total fixed manufacturing overhead cost	$	581,400
Variable manufacturing overhead per machine-hour	$	2.00

Recently, Job T687 was completed with the following characteristics:

Number of units in the job		10
Total machine-hours		40
Direct materials	$	630
Direct labor cost	$	1,260

The total job cost for Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $2,060

• $1,890

• $1,430

• $2,690

Answer 1

Answer: D) - $2,690

Here, Single Plant wide overhead rate is used based on Machine Hours.

Predetermined Overhead rate = Total Fixed manufacturing Overhead cost / Total Machine-hours

                                                       = $581,400 / 32,300

                                                       = $18 per Machine hour

Fixed Manufacturing overheads allocated to Job T687 = No. of Machine hours * Rate per machine hour

                                                                         = 40 Machine hours * $18 per Machine hour

                                                                      = $720

Variable Manufacturing overheads allocated to Job T687 = No. of Machine hours * Rate per machine hour

                                                                        = 40 Machine hours * $2 per Machine hour

                                                                        = $80