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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	20,000	13,000
Direct labor-hours	1,000	7,000
Total fixed manufacturing overhead cost	$ 152,000	$ 68,600
Variable manufacturing overhead per machine-hour	$ 2.10
Variable manufacturing overhead per direct labor-hour		$ 4.30

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

▸ $54,110

▸ $30,100

▸ $98,700

▸ $68,600

Textbook

Introduction to Managerial Accounting: Brewer Edition: 9e

Edition: 9^th

Authors: Brewer, Garrison, Noreen

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