Question

Young Foundry in Youngstown, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following: (Click the icon to view the costs.) Requirements 1. Compute Young's predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to jobs during the year? 3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the vear? By how much? 4. Were the jobs overcosted or undercosted? By how much? i Data Table Requirement 1. Compute Young's predetermined manufacturing overhead rate. Determine the formula to calculate the predetermined overhead rate, then calculate the rate = Prede Manufacturing overhead costs ..........$ Direct labor cost .......................$ Machine hours 580,000 1,450,000 EEEEEEEEEEEE.. 72,500 At the end of the year, the company had actually incurred the following: .......$ 1,190,000 Direct labor cost ......... Depreciation on manufacturing plant and equipment Property taxes on plant. ... Sales salaries Choose from any drop-down list and then click Check Answer. 500,000 19,000 25,500 14,000 8,000 55,500 hours Delivery drivers' wages...... 5 parts remaining Clear All Plant janitors' wages.. Machine hours ........

Answer 1

1

Estimated manufacturing overhead costs = $580,000

Estimated machine hours = 72,500

Estimated manufacturing overhead costs	/	Estimated machine hours	=	Predetermined overhead rate
580,000	/	72,500	=	$8 per machine hour

2.

Manufacturing overhead allocated = Actual machine hours x Predetermined overhead rate

= 55,500 x 8

= $444,000

3.

Actual manufacturing overhead costs = Depreciation on equipment + Property taxes on plant + Plant janitors wages

= 500,000+19,000+8,000

= $527,000

Under applied allocated overhead = Actual manufacturing overhead - Applied manufacturing overhead

= 527,000-444,000

= $83,000

4.

Job were under costed by $83,000.

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