Kubes 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 $90,000, variable manufacturing overhead of $3.50 per direct labor-hour, and 30,000 direct labor-hours. The company has provided the following data concerning Job A477 which was recently completed: The amount of overhead applied to Job A477 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $300
B) $350
C) $650
D) $1,000

Question

Kubes 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 $90,000, variable manufacturing overhead of $3.50 per direct labor-hour, and 30,000 direct labor-hours. The company has provided the following data concerning Job A477 which was recently completed:  The amount of overhead applied to Job A477 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $300 
B) $350 
C) $650 
D) $1,000

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $90,000 + ($3.50 per direct labor-hour × 30,000 direct labor-hours) = $90,000 + $105,000 = $195,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $195,000 ÷ 30,000 direct labor-hours = $6.50 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $6.50 per direct labor-hour × 100 direct labor-hours = $650

Kubes Corporation Uses a Job-Order Costing System with a Single