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

The predetermined overhead rate is:
Total overhead cost / Direct labor hours = ($90,000 + 30,000DLH*$3.50) / 30,000DLH = $6.25 per DLH
The amount of overhead applied to Job A477 is:
Overhead applied = Predetermined overhead rate * Actual direct labor hours
Overhead applied = $6.25 * 104 DLH = $650.00, which is closest to option C.

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