Question
Madole 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
Madole 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 Departments predetermined overhead rate is based on machine-hours and the Customizing Departments 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
12,000
Direct labor-hours
4,000
8,000
Total fixed manufacturing overhead cost
$119,700
$67,200
Variable manufacturing overhead per machine-hour
$ 2.00
Variable manufacturing overhead per direct labor-hour
$ 4.20
During the current month the company started and finished Job K973. The following data were recorded for this job:
Job K973:
Forming
Customizing
Machine-hours
50
20
Direct labor-hours
20
50
Required: a. Calculate the estimated total manufacturing overhead for the Forming Department. b. Calculate the predetermined overhead rate for the Customizing Department. c. Calculate the total overhead applied to Job K973 in both departments.
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