Question

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year:

	Direct materials...................................	$6,000
	Direct labor.........................................	$20,000
	Rent on factory building......................	$15,000
	Sales salaries.....................................	$25,000
	Depreciation on factory equipment......	$8,000
	Indirect labor.......................................	$12,000
	Production supervisor's salary.............	$15,000

Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

A) $2.50 per direct labor-hour

B) $2.79 per direct labor-hour

C) $3.00 per direct labor-hour

D) $4.00 per direct labor-hour

Beat Corporation uses a job-order costing system with a single plant-wide 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...........................................................	40,000
	Total fixed manufacturing overhead cost.............................	$344,000
	Variable manufacturing overhead per machine-hour..............	$3.90

Recently, Job M759 was completed. It required 60 machine-hours. The amount of overhead applied to Job M759 is closest to:

A) $750

B) $516

C) $984

D) $234

The following data have been recorded for recently completed Job 450 on its job cost sheet. Direct materials cost was $3,044. A total of 46 direct labor-hours and 104 machine-hours were worked on the job. The direct labor wage rate is $15 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $13 per machine-hour. The total cost for the job on its job cost sheet would be:

A) $4,332

B) $3,734

C) $3,072

D) $5,086

Odonnel Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $36,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 10,000 direct labor-hours.

The estimated total manufacturing overhead is closest to:

A) $64,000

B) $36,000

C) $28,000

D) $36,003

Answer 1

1. Solution is A. 2.5

Rent on factory building	15,000
Depreciation on factory equipment	8,000
Indirect labour	12,000
Production Supervisor's salary	15,000
Total OH (a)	50,000
Direct Labor hours (b)	20,000
OH Rate (a/b)	2.5

2. Solution is A. $750

Fixed Overheads	344,000
Total Machine hours	40,000
Fixed Oherhead rate per hour	8.60
Variable Overhead rate per hour	3.90
Total OH rate (Fixed + V'ble) (a)	12.50
Number of hours for Job M759 (b)	60.00
Overheads applied (a*b)	750.00

3. Solution D. $5,086

Direct Materials	3,044
Direct Labor (15*46)	690
Overheads (13*104)	1,352
Total cost	5,086

4. Solution A) $64,000

Direct Labor Hours (a)	10,000
Variable OH Rate (b)	2.80
Variable Overheads (a*b)	28,000
Fixed OH	36,000
Total OH	64,000