Problem:
AHDI Corporation uses a job-costing system at its plant. The plant has a machining department and a finishing department. The machining department allocates overhead to the jobs based on machine hours and the finishing department allocates overhead to the jobs based on direct labor costs.
The budget for the plant is as follows:
Machining Department Finishing department
Manufacturing overhead $5,000,000 $1,200,000
Machine Hours 12,000 2,000
Machine Repair Costs $1,400,000 $200,000
Direct Labor costs $2,000,000 $1,000,000
Direct Labor hours 40,000 50,000
Calculate the overhead allocation rates for each department
The job cost record for job 6789 is as follows;
Machining Department Finishing department
Direct Materials Used $70,000 $10,000
Machine Hours 1,245 13
Direct Labor costs $20,000 $15,000
Direct Labor hours 375 450
Calculate the Normal cost of Job 6789
The actual result for the year is as follows:
Machining Department Finishing department
Manufacturing overhead $5,500,000 $1,100,000
Machine Hours 11,200 1,800
Machine Repair Costs $1,200,000 $210,000
Direct Labor costs $2,500,000 $2,000,000
Direct Labor hours 35,000 57,500
Calculate the Actual Cost of Job 6789
Calculate the total amount of Under/Over Applied Overhead for the year.