The amount of overhead applied to Job M800 is closest to:

A) $270
B) $1,380
C) $825
D) $555

Question

The amount of overhead applied to Job M800 is closest to:A) $270B) $1,380C) $825D) $555

Grant Parker · Accepted Answer

Final Answer : C, Explanation :  The amount of overhead applied to Job M800 can be calculated using the predetermined overhead rate:Predetermined overhead rate= $22,050 / 27,000 machine-hours = $0.8167/hourOverhead applied to Job M800 = 675 machine-hours x $0.8167/hour = $550.48Rounding up to the nearest dollar gives us an overhead amount of $550.Thus, the best choice is C. Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base)= $90,000 + ($3.70 per direct labor-hour × 50,000 direct labor-hours)= $90,000 + $185,000 = $275,000Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $275,000 ÷ 50,000 direct labor-hours = $5.50 per direct labor-hourOverhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $5.50 per direct labor-hour × 150 direct labor-hours = $825Reference: CH02-Ref6Krier Corporation uses a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $738,000 and 30,000 direct labor-hours for the period.The company incurred actual total fixed manufacturing overhead of $792,000 and 31,500 total direct labor-hours during the period.

The amount of overhead applied to Job M800 is closest to:

A) $270
B) $1,380
C) $825
D) $555

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