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Prayer Corporation has two production departments, Machining and Customizing. The company uses a ...

Prayer Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining 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:

	Machining	Customizing
Machine-hours	19,000	13,000
Direct labor-hours	1,000	8,000
Total fixed manufacturing overhead cost	$ 110,200	$ 68,800
Variable manufacturing overhead per machine-hour	$ 2.00
Variable manufacturing overhead per direct labor-hour		$ 3.60

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

▸ $148,200

▸ $110,200

▸ $38,000

▸ $299,725

Textbook

Introduction to Managerial Accounting: Brewer Edition: 9e

Edition: 9^th

Authors: Brewer, Garrison, Noreen

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