{"id":188927,"date":"2025-02-08T08:40:00","date_gmt":"2025-02-08T08:40:00","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=188927"},"modified":"2025-02-08T08:40:03","modified_gmt":"2025-02-08T08:40:03","slug":"giannitti-corporation-bases-its-predetermined-overhead-rate-on-the-estimated-machine-hours-for-the-upcoming-year","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/02\/08\/giannitti-corporation-bases-its-predetermined-overhead-rate-on-the-estimated-machine-hours-for-the-upcoming-year\/","title":{"rendered":"Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year"},"content":{"rendered":"\n<p>Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below:<br>Estimated machine-hours<br>36,000<br>Estimated variable manufacturing overhead $3.01 per machine-hour<br>Estimated total fixed manufacturing overhead $1,058,040<br>The predetermined overhead rate for the recently completed year was closest to:<br>$29.39 per machine-hour<br>$3.01 per machine-hour<br>$32.40 per machine-hour<br>$32.81 per machine-hour<\/p>\n\n\n\n<p>Thach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $665,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. Recently, Job T321 was completed with the following characteristics:<br>Number of units in the job 30<br>Total machine-hours<br>Direct materials<br>$630<br>Direct labor cost<br>90<br>$2,880<br>The unit product cost for Job T321 is closest to:<br>$117.00<br>$154.50<br>$58.50<br>$51.50<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>Let&#8217;s break down both problems step by step to find the correct answers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Problem 1: Giannitti Corporation<\/h3>\n\n\n\n<p><strong>Data Given:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Estimated machine-hours = 36,000 hours<\/li>\n\n\n\n<li>Estimated variable manufacturing overhead = $3.01 per machine-hour<\/li>\n\n\n\n<li>Estimated total fixed manufacturing overhead = $1,058,040<\/li>\n<\/ul>\n\n\n\n<p><strong>Predetermined Overhead Rate Calculation:<\/strong><\/p>\n\n\n\n<p>The predetermined overhead rate is calculated by adding the total estimated fixed manufacturing overhead and the estimated variable manufacturing overhead. The formula is:<\/p>\n\n\n\n<p>[<br>\\text{Predetermined Overhead Rate} = \\frac{\\text{Estimated Total Manufacturing Overhead}}{\\text{Estimated Machine-Hours}}<br>]<\/p>\n\n\n\n<p>Where:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Total Manufacturing Overhead<\/strong> = Fixed Manufacturing Overhead + (Variable Manufacturing Overhead per Machine-Hour \u00d7 Estimated Machine-Hours)<\/li>\n<\/ul>\n\n\n\n<p>Substituting the values into the formula:<\/p>\n\n\n\n<p>[<br>\\text{Total Manufacturing Overhead} = 1,058,040 + (3.01 \\times 36,000)<br>]<br>[<br>\\text{Total Manufacturing Overhead} = 1,058,040 + 108,360 = 1,166,400<br>]<\/p>\n\n\n\n<p>Now, calculate the predetermined overhead rate:<\/p>\n\n\n\n<p>[<br>\\text{Predetermined Overhead Rate} = \\frac{1,166,400}{36,000} = 32.40 \\text{ per machine-hour}<br>]<\/p>\n\n\n\n<p><strong>Correct answer:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>$32.40 per machine-hour<\/strong><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Problem 2: Thach Corporation<\/h3>\n\n\n\n<p><strong>Data Given:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fixed manufacturing overhead = $665,000<\/li>\n\n\n\n<li>Variable manufacturing overhead = $3.00 per machine-hour<\/li>\n\n\n\n<li>Estimated machine-hours = 70,000 hours<\/li>\n\n\n\n<li>Job T321:<\/li>\n\n\n\n<li>Number of units in the job = 30<\/li>\n\n\n\n<li>Total machine-hours for the job = 90 hours<\/li>\n\n\n\n<li>Direct materials cost = $630<\/li>\n\n\n\n<li>Direct labor cost = $2,880<\/li>\n<\/ul>\n\n\n\n<p><strong>Step 1: Calculate the Predetermined Overhead Rate<\/strong><\/p>\n\n\n\n<p>The formula for the predetermined overhead rate is the same as in the first problem:<\/p>\n\n\n\n<p>[<br>\\text{Predetermined Overhead Rate} = \\frac{\\text{Fixed Manufacturing Overhead} + (\\text{Variable Manufacturing Overhead per Machine-Hour} \\times \\text{Estimated Machine-Hours})}{\\text{Estimated Machine-Hours}}<br>]<\/p>\n\n\n\n<p>Substituting the given values:<\/p>\n\n\n\n<p>[<br>\\text{Predetermined Overhead Rate} = \\frac{665,000 + (3.00 \\times 70,000)}{70,000}<br>]<br>[<br>\\text{Predetermined Overhead Rate} = \\frac{665,000 + 210,000}{70,000} = \\frac{875,000}{70,000} = 12.50 \\text{ per machine-hour}<br>]<\/p>\n\n\n\n<p><strong>Step 2: Apply the Overhead to Job T321<\/strong><\/p>\n\n\n\n<p>To calculate the overhead applied to Job T321, multiply the predetermined overhead rate by the machine-hours for the job:<\/p>\n\n\n\n<p>[<br>\\text{Overhead Applied to Job T321} = 12.50 \\times 90 = 1,125<br>]<\/p>\n\n\n\n<p><strong>Step 3: Calculate the Unit Product Cost for Job T321<\/strong><\/p>\n\n\n\n<p>Now, calculate the total cost of Job T321. The total cost is the sum of direct materials, direct labor, and applied overhead:<\/p>\n\n\n\n<p>[<br>\\text{Total Cost of Job T321} = 630 + 2,880 + 1,125 = 4,635<br>]<\/p>\n\n\n\n<p>Now, to find the unit product cost, divide the total cost by the number of units in the job:<\/p>\n\n\n\n<p>[<br>\\text{Unit Product Cost} = \\frac{4,635}{30} = 154.50<br>]<\/p>\n\n\n\n<p><strong>Correct answer:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>$154.50 per unit<\/strong><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>For <strong>Giannitti Corporation<\/strong>, the predetermined overhead rate is <strong>$32.40 per machine-hour<\/strong>.<\/li>\n\n\n\n<li>For <strong>Thach Corporation<\/strong>, the unit product cost for Job T321 is <strong>$154.50<\/strong>.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below:Estimated machine-hours36,000Estimated variable manufacturing overhead $3.01 per machine-hourEstimated total fixed manufacturing overhead $1,058,040The predetermined overhead rate for the recently completed year was closest to:$29.39 per machine-hour$3.01 per machine-hour$32.40 per machine-hour$32.81 per machine-hour Thach Corporation [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-188927","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/188927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=188927"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/188927\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=188927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=188927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=188927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}