Custom Metal Works produces castings and other metal parts to customer specifica

Question

Custom Metal Works produces castings and other metal parts to customer specifications. The company uses a job-order costing system and applies overhead costs to jobs on the basis of machine hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,320,000 in manufacturing overhead cost at an activity level of 576,000 machine-hours.

The company had no work in process at the beginning of the year. The company spent the entire month of January working on one large order

Custom Metal Works produces castings and other metal parts to customer specifications. The company uses a job-order costing system and applies overhead costs to jobs on the basis of machine hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,320,000 in manufacturing overhead cost at an activity level of 576,000 machine-hours.

The company had no work in process at the beginning of the year. The company spent the entire month of January working on one large order

Explanation / Answer

finished goods 30000 WIP 300000 300000/40000=7.5 per machine hour

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