Question

Morataya Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Machining Assembly Total Estimated total machine-hours (MHs) 7,000 3,000 10,000 Estimated total fixed manufacturing overhead cost $39,200 $6,600 $45,800 Estimated variable manufacturing overhead cost- per MH $1.90 $2.10 During the most recent month, the company started and completed two jobs--Job B and Job G. There were no beginning inventories. Data concerning those two jobs follow: Job B Job G Direct materials $14,800 $8,300 Direct labor cost $22,000 $ 8,900 Machining machine-hours 4,800 2,200 Assembly machine-hours 1,200 1,800 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That predetermined manufacturing overhead rate is closest to:a) $4.00 b) $7.50 c) $4.58 d) $6.54

Answer 1

Answer:

The correct answer is C.

Explanation:

Giving the following information:

Total Estimated total machine-hours (MHs) 10,000

Estimated total fixed manufacturing overhead cost= $45,800

Total Estimated variable manufacturing overhead cost- per MH= $1.90 +  $2.10= $4

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated  FIXED manufacturing overhead rate= (45,800/10,000)= $4.58