Kalp Corporation has two production departments, Machining and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Finishing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
During the current month the company started and finished Job K928. The following data were recorded for this job:

-The estimated total manufacturing overhead for the Machining Department is closest to:
A) $136,800
B) $34,200
C) $171,000
D) $359,100

Question

Kalp Corporation has two production departments, Machining and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Finishing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
  During the current month the company started and finished Job K928. The following data were recorded for this job:
 
-The estimated total manufacturing overhead for the Machining Department is closest to:
A) $136,800 
B) $34,200 
C) $171,000 
D) $359,100

Quizplus · Accepted Answer

Machining Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $136,800 + ($1.80 per machine-hour × 19,000 machine-hours)
= $136,800 +$34,200 = $171,000

Kalp Corporation Has Two Production Departments, Machining and Finishing