Whitlatch 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: ?Total machine-hours60,000?Total fixed manufacturing overhead cost$342,000?Variable manufacturing overhead per machine-hour$2.70Recently Job M238 was completed with the following characteristics:?Number of units in the job70?Total machine-hours140?Direct materials$945?Direct labor cost$2,800Required:Calculate the total job cost for Job M238.
What will be an ideal response?
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) = $342,000 + ($2.70 per machine-hour × 60,000 machine-hours) = $342,000 + $162,000 = $504,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $504,000 ÷ 60,000 machine-hours = $8.40 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $8.40 per machine-hour × 140 machine-hours = $1,176
| ? | Direct materials | $945 |
| ? | Direct labor | 2,800 |
| ? | Manufacturing overhead applied | 1,176 |
| ? | Total cost of Job M238 | $4,921 |
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