Dejarnette 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: The estimated total manufacturing overhead is closest to:
A) $416,003
B) $248,000
C) $664,000
D) $416,000

Question

Dejarnette 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:  The estimated total manufacturing overhead is closest to:
A) $416,003 
B) $248,000 
C) $664,000 
D) $416,000

Quizplus · Accepted Answer

The predetermined overhead rate formula is:

Predetermined overhead rate = Estimated total manufacturing overhead/Estimated total machine-hours

Plugging in the given data:

$832,000 / 125,000 machine-hours = $6.656 per machine-hour

To find the estimated total manufacturing overhead, we can use the actual machine-hours used for each job and multiply it by the predetermined overhead rate. However, since we do not have that information, we can use the estimated total machine-hours instead.

The estimated total manufacturing overhead is:

$6.656 per machine-hour x 100,000 machine-hours = $665,600

The closest choice is C) $664,000.

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