The following information is available pertaining to Iris Division that uses a plantwide overhead rate based on machine hours:
Mixing Dept. Finishing Dept. Total
Overhead $60,000 $150,000 $210,000
Direct labor-hours 7,500 2,500 10,000
Machine-hours 2,500 7,500 10,000
Production information pertaining to Job 101:
Mixing Dept. Finishing Dept. Total
Prime costs $10,000 $0 $10,000
Direct labor-hours 250 0 250
Machine-hours 10 10 20
Units produced 500 0 500
What are the total overhead costs assigned to Job 101? $240, $420, $360, or $180

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facundobuzzetti facundobuzzetti · Answer 1 · 2021-02-09T01:18:24+01:00

Answer:

Allocated MOH= $420

Explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 210,000 / 10,000

Predetermined manufacturing overhead rate= $21 per machine hour

Now, we can allocate overhead to Job 101:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 21*20

Allocated MOH= $420