Levron 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 $58,000, variable manufacturing overhead of $2.00 per machine-hour, and 20,000 machine-hours. The company has provided the following data concerning Job P978 which was recently completed: The amount of overhead applied to Job P978 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $232
B) $160
C) $392
D) $552

Question

Levron 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 $58,000, variable manufacturing overhead of $2.00 per machine-hour, and 20,000 machine-hours. The company has provided the following data concerning Job P978 which was recently completed:  The amount of overhead applied to Job P978 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $232 
B) $160 
C) $392 
D) $552

Quizplus · Accepted Answer

Predetermined overhead rate = (Fixed manufacturing overhead cost + Variable manufacturing overhead cost)/Machine-hours
Predetermined overhead rate = ($58,000 + $2.00 per machine-hour x 20,000 machine-hours) / 20,000 machine-hours = $2.90 per machine-hour

Overhead applied to Job P978 = Predetermined overhead rate x Machine-hours used on Job P978
Overhead applied to Job P978 = $2.90 per machine-hour x 135 machine-hours = $391.50

The amount of overhead applied to Job P978 is closest to $392.

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