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Jurica Corporation has two production departments, Forming and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production
Jurica Corporation has two production departments, Forming and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Customizing 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:
Forming | Customizing | |||
Machine-hours | 19,000 | 15,000 | ||
Direct labor-hours | 4,000 | 6,000 | ||
Total fixed manufacturing overhead cost | $ | 100,700 | $ | 63,000 |
Variable manufacturing overhead per machine-hour | $ | 2.00 | ||
Variable manufacturing overhead per direct labor-hour | $ | 3.90 |
The predetermined overhead rate for the Customizing Department is closest to:
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A) | $4.55 per direct labor-hour |
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B) | $14.40 per direct labor-hour |
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C) | $3.90 per direct labor-hour |
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D) | $10.50 per direct labor-hour |
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