Gerstein 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 $3.70 per direct labor-hour, and 50,000 direct labor-hours. The company recently completed Job M800 which required 150 direct labor-hours. The estimated total manufacturing overhead is closest to:
A) $90,000
B) $275,000
C) $185,000
D) $90,004

Question

Quizplus · Accepted Answer

The total estimated manufacturing overhead is calculated by adding the total fixed manufacturing overhead to the total variable manufacturing overhead. The variable manufacturing overhead is calculated by multiplying the variable rate ($3.70) by the total direct labor-hours (50,000). Therefore, the total estimated manufacturing overhead is $90,000 + ($3.70 * 50,000) = $275,000.

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