The firm’s job-order costing system uses direct-labor hours (measured at practical capacity) as the cost driver for overhead application. In December of the preceding year, Shar had prepared the following budget for direct-labor and manufacturing-overhead costs for the current year. The plant is theoretically capable of operating at 140,000 direct-labor hours per year. However, Shar estimates that the practical capacity is 115,000 hours in a typical year.
Manufacturing
Overhead
Direct-Labor Hours Variable Fixed
100,000 $300,000 $230,000
115,000 345,000 230,000
130,000 390,000 230,000
During November the following jobs were completed:
Job 57 10 oz.water glasses
Job 58 5 oz. juice glasses
How do I find:
1. Calculate the predetermined overhead rate for the current year
2. Calculate the total cost of Job 57.
3. Compute the amount of manufacturing overhead applied to job 59 during November.
4. What was the total amount of manufacturing overhead applied during November?
5. Compute the actual manufacturing overhead incurred during November.
6. Calculate the overapplied or underapplied overhead for November.