Question

Kahuna Industries has two manufacturing departments--Fabrication and Finishing. The company used the following data at the beginning of the year to calculate pre-determined overhead rates:
Fabrication Finishing Total
Estimated total machine-hours (MHs) 4,000 1,000 5,000
Estimated total fixed manufacturing overhead cost $30,000 $3,400 $33,400
Estimated variable manufacturing overhead cost
per machine-hour $2.00 $4.00
During the most recent month, the company started and completed two jobs--Job 14-X and Job 15-Z. There were no beginning inventories. Data concerning those two jobs follow:
Job 14-X Job 15-Z
Direct materials $14,700 $8,400
Direct labor cost $21,600 $8,400
Fabrication machine-hours 2,700 1,300
Finishing machine-hours 400 600
Assume that the company uses a plantwide pre-determined manufacturing overhead rate based on machine-hours. The total manufacturing cost assigned to Job 15-Z is closest to:______.

Answer 1

Answer:

Total manufacturing cost= $34,052

Explanation:

First, we need to calculate the predetermined overhead rate:

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

Total estimated overhead= 33,400 + (2*4,000 + 4*1,000)

Total estimated overhead=  $45,400

Predetermined manufacturing overhead rate= 45,400 / 5,000

Predetermined manufacturing overhead rate= $9.08 per machine hour

Now, we can determine the total manufacturing cost of Job 15-Z:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= (1,300 + 600)*9.08= $17,252

Total manufacturing cost= 8,400 + 8,400 + 17,252

Total manufacturing cost= $34,052