Question at position 14 Parido Corporation has two manufacturing departments--Casting and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: [table]
| Casting | Assembly | Total Estimated total machine-hours (MHs) | 8,000 | 2,000 | 10,000 Estimated total fixed manufacturing overhead cost | $ 44,000 | $ 4,200 | $ 48,200 Estimated variable manufacturing overhead cost per MH | $ 1.90 | $ 3.00 |
[/table] During the most recent month, the company started and completed two jobs--Job A and Job H. There were no beginning inventories. Data concerning those two jobs follow: [table]
| Job A | Job H
Casting machine-hours | 5,400 | 2,600 Assembly machine-hours | 800 | 1,200
[/table] Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job H is closest to: Note: Round your intermediate calculations to 2 decimal places. $18,044$8,328$26,372$18,316

Question

Question at position 14 Parido Corporation has two manufacturing departments--Casting and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: [table]
| Casting | Assembly | Total Estimated total machine-hours (MHs) | 8,000 | 2,000 | 10,000 Estimated total fixed manufacturing overhead cost | $ 44,000 | $ 4,200 | $ 48,200 Estimated variable manufacturing overhead cost per MH | $ 1.90 | $ 3.00 | 
[/table] During the most recent month, the company started and completed two jobs--Job A and Job H. There were no beginning inventories. Data concerning those two jobs follow: [table]
| Job A | Job H
Casting machine-hours | 5,400 | 2,600 Assembly machine-hours | 800 | 1,200
[/table] Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job H is closest to: Note: Round your intermediate calculations to 2 decimal places. $18,044$8,328$26,372$18,316

BlackTom AI · Accepted Answer

We start by identifying the data and the method required: plantwide predetermined overhead rate based on machine-hours, using the total estimated overhead and total estimated machine-hours.
First, compute the total overhead to be allocated. The fixed manufacturing overhead costs sum to 48,200. The variable overhead depends on machine-hours with a weighted average: 1.90 per MH for Casting and 3.00 per MH for Assembly. Using the estimated MHs (Casting 8,000 and Assembly 2,000) gives total estimated variable overhead: (1.90 × 8,000) + (3.00 × 2,000) = 15,200 + 6,000 = 21,200. Therefore, total estimated overhead = 48,200 (fixed) + 21,200 (variable) = 69,400.
Next, determine the plantwide rate by dividing total estimated overhead by total estimated machine-hours: 69,400 ÷ (8,000 + 2,000) = 69,400 ÷ 10,000 = 6.94 per machine-hour.
Now apply this rate to Job H. Job H uses 2,600 Casting MHs and 1,200 Assembly MHs, for a total of 3,800 MHs. Overhead applied to Job H = 3,800 × 6.94 = 26,372.

Option-by-option analysis:
- $18,044: This value would imply a lower overhead rate or fewer MHs allocated to Job H. It might come from miscalculating the rate (e.g., using only fixed overhead of 48,200 ÷ 10,000 = 4.82 per MH) or misapplying variable rates without proper weighting. However, using the correct total overhead and plantwide rate shows the result should be higher.
- $8,328: This is substantially lower and would result from dividing a smaller subtotal by a larger denominator or neglecting a portion of the overhead. One way this could arise is applying only the variable portion without fixed overhead, or misallocating only a portion of Job H’s MHs, but neither aligns with the plantwide rate calculation as defined.
- $26,372: This matches the calculation using the plantwide rate of 6.94 per MH applied to Job H’s total machine-hours (3,800 MHs). It reflects both the fixed and variable components properly weighted by total MHs.
- $18,316: This option could result from rounding inconsistencies or using a slightly different rate (e.g., rounding to 6.90 or 6.95) or miscounting total MHs. While it is close to the computed value, it does not equal the precise 26,372 derived from the described method.

In summary, applying the plantwide rate based on total estimated overhead and total estimated machine-hours to Job H yields 26,372, with other options arising from misapplication or rounding of rates and hours.

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A predetermined overhead rate is calculated by dividing estimated total manufacturing overhead cost by estimated units in the allocation base.

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