8 Tiff Corporation has two production departments, Casting and Assembly. The com

Question

8 Tiff Corporation has two production departments, Casting and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate In each production department. The Casting Department's predetermined overheed 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: Machine-hours 17,000 1,000 $129,200 10,000 5,000 $46,500 Total fixed manufacturing overhead cost Variable manufacturing overhead per machine- 1.80 hour Variable manufacturing overhead per direct labor-hour $ 3.80 During the current month the company started and finished Job P131. The following data were recorded for this job Job P131: Machine-hours Direct labor-hours 90 20 20 60 The amount of overhead applied in the Assembly Department to Job P131 is closest to: (Round your lntermediate calculations to 2 declmal places.) Multiple Choice 0

Explanation / Answer

Calculate overhead applied on assembly department for job P131 :

FIxed predetermine overhead rate = 46500/5000 = 9.30 per direct labour hour

Total predetermine overhead rate = (9.30+3.80) = 13.10 per labour hour

Overhead applied in the assembly department to job P131 = 60*13.10 = 786

so answer is d) $786

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