Ahlheim Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly 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 T924. The following data were recorded for this job:

-The estimated total manufacturing overhead for the Assembly Department is closest to:
A) $27,000
B) $55,200
C) $82,200
D) $47,700

Question

Ahlheim Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly 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 T924. The following data were recorded for this job:
 
-The estimated total manufacturing overhead for the Assembly Department is closest to:
A) $27,000 
B) $55,200 
C) $82,200 
D) $47,700

Quizplus · Accepted Answer

Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)
= $55,200 + ($4.50 per direct labor-hour × 6,000 direct labor-hours)
= $55,200 + $27,000 = $82,200

Ahlheim Corporation Has Two Production Departments, Forming and Assembly