Kalp Corporation has two production departments, Machining and Finishing. The company uses a job-order costing...
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Accounting
Kalp Corporation has two production departments, Machining and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Departments predetermined overhead rate is based on machine-hours and the Finishing Departments predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
Machining
Finishing
Machine-hours
19,000
12,000
Direct labor-hours
2,000
8,000
Total fixed manufacturing overhead cost
$ 136,800
$ 69,600
Variable manufacturing overhead per machine-hour
$ 1.80
Variable manufacturing overhead per direct labor-hour
$ 3.20
During the current month the company started and finished Job K928. The following data were recorded for this job:
Job K928:
Machining
Finishing
Machine-hours
90
10
Direct labor-hours
30
50
Direct materials
$ 775
$ 415
Direct labor cost
$ 630
$ 1,050
The predetermined overhead rate for the Machining Department is closest to:
Multiple Choice
$7.20 per machine-hour
$9.00 per machine-hour
$21.38 per machine-hour
$1.80 per machine-hour
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