Branin 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 $160,000, variable manufacturing overhead of $3.40 per direct labor-hour, and 80,000 direct labor-hours. The company has provided the following data concerning Job A578 which was recently completed:

-The amount of overhead applied to Job A578 is closest to:
A) $500
B) $1,350
C) $2,200
D) $850

Question

Branin 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 $160,000, variable manufacturing overhead of $3.40 per direct labor-hour, and 80,000 direct labor-hours. The company has provided the following data concerning Job A578 which was recently completed:
 
-The amount of overhead applied to Job A578 is closest to:
A) $500 
B) $1,350 
C) $2,200 
D) $850

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) = $160,000 + ($3.40 per direct labor-hour × 80,000 direct labor-hours) = $160,000 + $272,000 = $432,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $432,000 ÷ 80,000 direct labor-hours = $5.40 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $5.40 per direct labor-hour × 250 direct labor-hours = $1,350

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