Stoke Corporation has two production departments, Forming and Assembly. 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 Assembly 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: During the current month the company started and finished Job A460. The following data were recorded for this job:
The amount of overhead applied in the Forming Department to Job A460 is closest to: (Round your intermediate calculations to 2 decimal places.)

A) $184,000.00
B) $184.00
C) $736.00
D) $664.00

Question

Stoke Corporation has two production departments, Forming and Assembly. 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 Assembly 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:

During the current month the company started and finished Job A460. The following data were recorded for this job:

The amount of overhead applied in the Forming Department to Job A460 is closest to: (Round your intermediate calculations to 2 decimal places.)

A) $184,000.00
B) $184.00
C) $736.00
D) $664.00

Avery Damjanovic · Accepted Answer

Final Answer : C, Explanation :  To calculate the amount of overhead applied in the Forming Department, we need to use the Forming Department's predetermined overhead rate, which is $4.80 per machine-hour.The Forming Department used 40,000 machine-hours on Job A460 (20,000 machine-hours for Parts X and Y each).Therefore, the amount of overhead applied in the Forming Department to Job A460 is:40,000 machine-hours x $4.80 per machine-hour = $192,000However, we need to adjust this amount by the difference between the actual overhead incurred and the overhead applied in the Forming Department:Actual overhead incurred in the Forming Department = $184,800Overhead applied in the Forming Department = $192,000Overhead adjustment = Actual overhead incurred - Overhead applied= $184,800 - $192,000= -$7,200Since the actual overhead incurred was less than the overhead applied, we need to subtract this overhead adjustment from the overhead applied:Overhead applied in the Forming Department to Job A460 = $192,000 - $7,200 = $184,800Therefore, the closest option is C) $736.00.

Definitions

Learning Objectives

Learning Objectives

Related questions