Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 235,000 Fixed manufacturing overhead cost $ 3,760,000 Variable manufacturing overhead cost per machine-hour $ 2.00 Required:
1. Compute the plantwide predetermined overhead rate.
2. During the year, Job P90 was started, completed, and sold to the customer for $3,900. The following information was available with respect to this job: Direct materials $ 1,794 Direct labor cost $ 1,287 Machine-hours used 86
Compute the total manufacturing cost assigned to Job P90.

Results are below.

Explanation:

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

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

Predetermined manufacturing overhead rate= (3,760,000 / 235,000) + 2

Predetermined manufacturing overhead rate= $18 per machine hour

Job P90:

Direct materials $ 1,794

Direct labor cost $ 1,287

Machine-hours used 86

We need to allocate overhead costs:

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

Allocated MOH= 18*86= $1,548

Total manufacturing costs= 1,548 + 1,794 + 1,287

Total manufacturing costs= $4,629

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