Sivret 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 the following data:
Recently, Job M598 was completed with the following characteristics:

-The amount of overhead applied to Job M598 is closest to:
A) $930
B) $4,200
C) $2,340
D) $3,270

Question

Sivret 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 the following data:
  Recently, Job M598 was completed with the following characteristics:
 
-The amount of overhead applied to Job M598 is closest to:
A) $930 
B) $4,200 
C) $2,340 
D) $3,270

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) = $624,000 + ($3.10 per machine-hour × 80,000 machine-hours) = $624,000 + $248,000 = $872,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $872,000 ÷ 80,000 machine-hours = $10.90 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $10.90 per machine-hour × 300 machine-hours = $3,270

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