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Garza Corporation has two production departments, Casting and Customizing. The company uses a ...

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Garza Corporation has two production departments, Casting and Customizing. The company uses a ...

Garza Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department’s predetermined overhead rate is based on machine-hours and the Customizing 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:

	Casting	Customizing
Machine-hours	23,000	21,000
Direct labor-hours	15,000	2,000
Total fixed manufacturing overhead cost	$ 89,700	$ 6,200
Variable manufacturing overhead per machine-hour	$ 1.50
Variable manufacturing overhead per direct labor-hour		$ 4.10

The estimated total manufacturing overhead for the Customizing Department is closest to:

▸ $151,200

▸ $8,200

▸ $14,400

▸ $6,200

Textbook

Introduction to Managerial Accounting: Brewer Edition: 9e

Edition: 9^th

Authors: Brewer, Garrison, Noreen

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