Hickingbottom Corporation has two production departments, Forming and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Finishing 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: FormingFinishingMachine-hours 17,000 15,000Direct labor-hours 1,000 7,000Total fixed manufacturing overhead cost$96,900$65,800Variable manufacturing overhead per machine-hour$2.00 Variable manufacturing overhead per direct labor-hour $3.60 During the current month the company started and finished Job M381. The following data were recorded for this job: Job M381:FormingFinishingMachine-hours 80 30Direct labor-hours 30 40Direct materials$840$350Direct labor cost$750$1,000The predetermined overhead rate for the Forming Department is closest to:

Overheads are allocated to a particular job or process based on some pre-determined rate which can…

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Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 15P: The following information, taken from the books of Herman Brothers Manufacturing represents the...

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

	Forming	Finishing
Machine-hours		17,000		15,000
Direct labor-hours		1,000		7,000
Total fixed manufacturing overhead cost	$	96,900	$	65,800
Variable manufacturing overhead per machine-hour	$	2.00
Variable manufacturing overhead per direct labor-hour			$	3.60

During the current month the company started and finished Job M381. The following data were recorded for this job:

Job M381:	Forming	Finishing
Machine-hours		80		30
Direct labor-hours		30		40
Direct materials	$	840	$	350
Direct labor cost	$	750	$	1,000

The predetermined overhead rate for the Forming Department is closest to:

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