Valvano 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 total fixed manufacturing overhead cost of $440,000, variable manufacturing overhead of $2.20 per machine-hour, and 50,000 machine-hours. The estimated total manufacturing overhead is closest to:
A) $440,000
B) $110,000
C) $440,002
D) $550,000

Question

Quizplus · Accepted Answer

To calculate the estimated total manufacturing overhead, we need to add the fixed manufacturing overhead and the variable manufacturing overhead.

Fixed manufacturing overhead = $440,000

Variable manufacturing overhead = $2.20/machine-hour x 50,000 machine-hours = $110,000

Total manufacturing overhead = Fixed manufacturing overhead + Variable manufacturing overhead = $440,000 + $110,000 = $550,000

Therefore, the estimated total manufacturing overhead is closest to $550,000, which is answer choice D.

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