Reference no: EM132943571

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

                                                      Casting            Customizing

Machine-hours                         16,200                12,200

Direct labor-hours                     5,100                   6,100

Total fixed manufacturing

overhead cost                         $ 81,000                 $ 65,880

Variable manufacturing overhead per machine-hour           $ 2.40

Variable manufacturing overhead per direct labor-hour $ 4.80

During the current month the company started and finished Job T138. The following data were recorded for this job:

Job T138:         Casting            Customizing

Machine-hours     70                     50

Direct labor-hours  15                     80

Problem 1: The amount of overhead applied in the Customizing Department to Job T138 is closest to