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Kalp Corporation has two production departments, Machining and Finishing. The company uses a job-order costing...

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Accounting

Kalp Corporation has two production departments, Machining and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Departments predetermined overhead rate is based on machine-hours and the Finishing Departments predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

Machining Finishing
Machine-hours 19,000 12,000
Direct labor-hours 2,000 8,000
Total fixed manufacturing overhead cost $ 136,800 $ 69,600
Variable manufacturing overhead per machine-hour $ 1.80
Variable manufacturing overhead per direct labor-hour $ 3.20

During the current month the company started and finished Job K928. The following data were recorded for this job:

Job K928: Machining Finishing
Machine-hours 90 10
Direct labor-hours 30 50
Direct materials $ 775 $ 415
Direct labor cost $ 630 $ 1,050

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

Multiple Choice

$7.20 per machine-hour

$9.00 per machine-hour

$21.38 per machine-hour

$1.80 per machine-hour

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