Problem - Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company's work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $78,400. There was no finished-goods inventory on this date.
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. Budgeted totals for 20x4 for direct labor and manufacturing overhead are $2,100,000 and $2,730,000, respectively.
Actual results for the year follow.
Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct-material costs of $78,000 and direct-labor charges of $42,500. BBBC charges any under- or overapplied overhead to Determine the company's predetermined overhead application rate.
| Information Needed: |
| Direct material |
$2,800,000.00 |
| Direct labor |
$2,175,000.00 |
| Indirect material |
$32,500.00 |
| Indirect labo |
$1,430,000.00 |
| Factory depreciation |
$870,000.00 |
| Factory insurance |
$29,500.00 |
| Factory utilities |
$415,000.00 |
| Selling and administrative expenses |
$1,080,000.00 |
| Total |
$8,832,000 |