InStep Company prints custom training material for corporations. The business was started in January 1, 2015. The company uses a normal costing method. It has two direct cost pools, direct materials and direct labour, and one indirect cost pool, overhead. Overhead is charged to printing jobs on the basis of direct labour cost. The following information is available for 2015:
Budgeted direct labour cost $225,000
Budgeted direct material cost $150,000
Budgeted overhead costs $315,000
Actual direct material costs $148,500
Actual direct labour costs $213,500
Actual manufacturing overhead cost $302,100
The company completed two jobs in December 31, 2015. The costs added to each job as of December 31 are as follows:
Direct materials Direct labour
Job 11 $48,700 $51,000
Job 12 $59,100 $68,000
Required
Compute the total cost of each of the two jobs.
Compute the amount of overhead under or over-allocated
Describe clearly what you would do with the overhead under or over-allocated in the accounts at December 2015.