Question

Kody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		155,000
Fixed manufacturing overhead cost	$	656,000
Variable manufacturing overhead cost per machine-hour	$	4.80

Required:

1. Compute the predetermined overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

         

2. During the year Job 500 was started and completed. The following information was available with respect to this job:

Direct materials requisitioned	$	310
Direct labor cost	$	260
Machine-hours used		40

Compute the total manufacturing cost assigned to Job 500. (Round your intermediate calculations and final answer to 2 decimal places.)

        

3-a. During the year the company worked a total of 145,700 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,323,171. What is the amount of underapplied or overapplied overhead for the year? (Round your intermediate calculations to 2 decimal places.)

       

3-b. If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease?

      

	Increase
	Decrease

Answer 1

(1) Puedetermined Orechead uate fired $ 656,000 165.000 $4.23 Van'a te $4,80 $9.03 Overhead Rate - $9.03 21 Jobs robboo $ 310 Dauec maltials Dåect labo Overhead ( 40x 4 903) - $ 260 $ 3612 $ 9312 & Potal manufacturing cast : $9312 03) a) Absorbed Overhead 145700 x $9.03 $ 1,315,67|| Actual overhead a $ 1,323,171 Difference $ 4500 ander applied Olechead' - $4500 Decleorex Reason Dell to increase in coas net income decreased