Packard Products uses a job-costing system for its units, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The following information relates to the Machining Department for the year just ended:
Budgeted manufacturing overhead $8,000,000
Actual manufacturing overhead 7,975,000
Budgeted machine hours 500,000
Actual machine hours 510,000
The Machining Department data that follow pertain to job no. 243, the only job in production at year-end.
Direct materials $64,800
Direct labor cost 35,200
Machine hours 450
Required:
A. Assuming the use of normal costing, calculate the predetermined overhead rate that is used in the Machining Department.
B. Compute the cost of the Machining Department's year-end work-in-process inventory.
C. Determine whether overhead was under- or overapplied during the year in the Machining Department.