Discuss the amount of underapplied

Question

Broucek Inc. makes baby furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company's management made the following estimates for the year:

	Department
	Preparation	Fabrication
Machine-hours	83,000	32,000
Direct labor-hours	33,000	57,000
Direct materials cost	$194,000	$204,000
Direct labor cost	$280,000	$521,000
Fixed manufacturing overhead cost	$207,500	$518,700
Variable manufacturing overhead per machine-hour	$3.00	-
Variable manufacturing overhead per direct labor-hour	-	$5.00

Job 135 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

	Department
	Preparation	Fabrication
Machine-hours	360	67
Direct labor-hours	80	133
Direct materials cost	$940	$1,120
Direct labor cost	$690	$970

Required:

1.	Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round your answers to 2 decimal places.)

	Predetermined Overhead Rate
Preparation department	$	per MH
Fabrication department	$	per DLH

2.	Compute the total overhead cost applied to Job 135. (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.)

Total overhead cost

$

3-a.	What would be the total cost recorded for Job 135? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.)

	Department
	Preparation	Fabrication	Total
Direct materials	$	$	$
Direct labor
Manufacturing overhead
Total cost	$	$	$

3-b.	If the job contained 29 units, what would be the unit product cost? (Round "Predetermined overhead rate" and final answer to 2 decimal places and other intermediate calculations to the nearest dollar amount.)

Unit product cost

$  per unit

4.	At the end of the year, the records of Broucek Inc. revealed the following actual cost and operating data for all jobs worked on during the year:

	Department
	Preparation	Fabrication
Machine-hours	82,700	24,800
Direct labor-hours	28,000	53,000
Direct materials cost	$165,800	$412,000
Manufacturing overhead cost	$464,550	$711,400

What was the amount of underapplied or overapplied overhead in each department at the end of the year?(Input all amounts as positive values. Do not round your intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Select "None" for no effect (i.e., zero variance).)

Preparation Department	(Click to select)Underapplied overheadNoneOverapplied overhead	$
Fabrication Department	(Click to select)Overapplied overheadUnderapplied overheadNone	$