The amount of overhead applied in the Customizing Department to Job T898 is closest to:

A) $450.00
B) $119,700.00
C) $665.00
D) $215.00

Question

The amount of overhead applied in the Customizing Department to Job T898 is closest to:A) $450.00B) $119,700.00C) $665.00D) $215.00

Nathan Thompson · Accepted Answer

Final Answer : C, Explanation :  Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)= $81,000 + ($4.30 per direct labor-hour × 9,000 direct labor-hours)= $81,000 + $38,700 = $119,700Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $119,700 ÷9,000 direct labor-hours = $13.30 per direct labor-hourOverhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $13.30 per direct labor-hour × 50 direct labor-hours = $665Reference: CH02-Ref43Petty Corporation has two production departments, Milling and Finishing.The company uses a job-order costing system and computes a predetermined overhead rate in each production department.The Milling Department's predetermined overhead rate is based on machine-hours and the Finishing 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:

The amount of overhead applied in the Customizing Department to Job T898 is closest to:

A) $450.00
B) $119,700.00
C) $665.00
D) $215.00

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