Problem:
Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.
In establishing the predetermined overhead rates for 2014, the following estimates were made for the year.
|
|
Department
|
|
|
A
|
B
|
C
|
|
Manufacturing verhaad
|
$720,000
|
$640,000
|
$900,000
|
|
Direct labor cost
|
$600,000
|
$100,000
|
$600,000
|
|
Direct labor hours
|
50,000
|
40,000
|
40,000
|
|
Machine hours
|
100,000
|
120,000
|
150,000
|
During January, the job cost sheets showed the following costs and production data.
|
|
Department
|
|
|
A
|
B
|
C
|
|
Manufacturing verhaad
|
$720,000
|
$640,000
|
$900,000
|
|
Direct labor cost
|
$600,000
|
$100,000
|
$600,000
|
|
Direct labor hours
|
50,000
|
40,000
|
40,000
|
|
Machine hours
|
100,000
|
120,000
|
150,000
|
Instructions
(a) Compute the predetermined overhead rate for each department.
(b) Compute the total manufacturing costs assigned to jobs in January in each department.
(c) Compute the under- or over applied overhead for each department at January 31.