Kroeker Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling 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: During the current month the company started and finished Job T898. The following data were recorded for this job:
The amount of overhead applied in the Customizing Department to Job T898 is closest to: (Round your intermediate calculations to 2 decimal places.)

A) $450.00
B) $119,700.00
C) $665.00
D) $215.00

Question

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

During the current month the company started and finished Job T898. The following data were recorded for this job:

The amount of overhead applied in the Customizing Department to Job T898 is closest to: (Round your intermediate calculations to 2 decimal places.)

A) $450.00
B) $119,700.00
C) $665.00
D) $215.00

Karim Mneimne · Accepted Answer

Final Answer : C, Explanation :  First, we need to calculate the predetermined overhead rate for each department:Milling Department: $264,000 / 40,000 machine-hours = $6.60 per machine-hourCustomizing Department: $126,000 / 36,000 direct labor-hours = $3.50 per direct labor-hourNext, we can use the information provided to calculate the total amount of overhead applied to Job T898:Milling Department: 250 machine-hours x $6.60 per machine-hour = $1,650.00Customizing Department: 190 direct labor-hours x $3.50 per direct labor-hour = $665.00Total overhead applied to Job T898 = $1,650.00 + $665.00 = $2,315.00Therefore, the amount of overhead applied in the Customizing Department to Job T898 is closest to $665.00, which is choice C.

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