Moran, Inc., manufactures bricks. Each brick goes through 2 departments: Mixing and Firing. The company uses...

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Moran, Inc., manufactures bricks. Each brick goes through 2 departments: Mixing and Firing. The company uses a job order cost

business accounting

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Answer 1

Answer #1

a)	Particulars	Mixing	Firing

	Manufacturing OH	$ 150,000.00	$ 140,000.00
	Direct Materials	$ 300,000.00
	Machine Hours		70000
	Predetermined OH rate	$ 0.50	$ 2.00

Explanation: Here, Manufacturing OH has been divided by Direct Materials/ Machine Hours to get the Predetermined OH rate. Like for Mixing Dept, Predetermined OH rate = $ 150000 / $ 300000 = $ 0.50 per Material Cost


b)	Particulars	Mixing	Firing

	Direct Materials	$ 6,000.00
	Machine Hours		120
	Predetermined OH rate	$ 0.50	$ 2.00
	Overhead applied	$ 3,000.00	$ 240.00

Explanation: Here, Predetermined OH rate has been multiplied with Direct Materials/ Machine Hours incurred for the job to get the Overhead applied tin each department. Like for Mixing Dept, OH applied = $ 6000 x $ 0.5 = $ 3000

c)	Particulars	Mixing	Firing

	Actual Overhead	$ 2,800.00	$ 262.00
	Applied Overhead	$ 3,000.00	$ 240.00
	Overapplied/ (Underapplied)	$ 200.00	$ (22.00)

Explanation: Here, the actual OH incurred and the OH applied is being compared. Where Applied OH is greater than Actual OH, it's a case of Overapplied Overhead and where Applied OH is lower than Actual OH, it's a case of Underapplied OH.

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Answer 2

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