Placker 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 $155,000,variable manufacturing overhead of $3.40 per machine-hour,and 50,000 machine-hours.Recently,Job A881 was completed with the following characteristics:
The total job cost for Job A881 is closest to:
A) $3,595
B) $2,945
C) $2,950
D) $1,295

Question

Placker 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 $155,000,variable manufacturing overhead of $3.40 per machine-hour,and 50,000 machine-hours.Recently,Job A881 was completed with the following characteristics:
 The total job cost for Job A881 is closest to:
A) $3,595 
B) $2,945 
C) $2,950 
D) $1,295

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $155,000 + ($3.40 per machine-hour × 50,000 machine-hours) = $155,000 + $170,000 = $325,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $325,000 ÷ 50,000 machine-hours = $6.50 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $6.50 per machine-hour × 100 machine-hours = $650
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Placker Corporation Uses a Job-Order Costing System with a Single