Question

Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 245,000 Fixed manufacturing overhead cost 4,410,000 2.00 Variable manufacturing overhead cost per machine-hour $ 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job P90 was started, completed, and sold to the customer for $4,100. The following information was available with respect to this job: Direct materials 1,886 Direct labor cost 1,353 Machine-hours used Compute the total manufacturing cost assigned to Job P90. Predetermined overhead rate per MH Direct materials Direct labor Overhead applied Total manufacturing cost

Answer 1

Predetermined rate = Estimated overheads/Estimated Machine hours + Variable rate per hour

= 4,410,000/245,000 + 2

= $20 per machine hour

Cost Assigned to P90 will be as follows:
Direct Material	1,886
Direct Labor	1,353
Overhead Applied 88*20	1,760
Total Manufacturing Cost	4,999