Question

Problem 15-4A (Part Level Submission) Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K. In establishing the predetermined overhead rates for 2017, the following estimates were made for the year. Department Manufacturing overhead Direct labor costs Direct labor hours Machine hours $1,179,000 $1,684,286 150,000 600,000 $1,750,000 $1,875,000 125,000 750,000 $1,080,000 $675,000 60,000 120,000 During January, the job cost sheets showed the following costs and production data Direct materials used Direct labor costs Manufacturing overhead incurred Direct labor hours Machine hours Department D $210.000 $189,000 $100,000 $165,000 $140.500 $106,000 12.000 16,500 S1000 67.500 5117,000 $55,250 $118.500 5.250 10.40

Answer 1

.(a)
	Overhead rate
Department D ( Estimated manufacturing overhead / Estimated Direct labor cost = 1179000 / 1684286 )	70.00%
Department E ( Estimated manufacturing overhead / Estimated direct labor hours = 1750000 / 125000 )	14.00	per direct labor hour
Department K ( Estimated manuafcturing overhead / Estimated machine hours = 1080000 / 120000 )	9.00	per machine hour

.(b)
	Manufacturing costs
Department D [ Overhead rate * Actual direct labor cost = 70% * 180000 ]	126000
Department D [ Overhead rate * Actual direct labor hour = 14 * 16500 ]	231000
Department D [ Overhead rate * Actual machine hour = 9 * 10430 ]	93870

.(c)
	Manufacturing overhead [ Actual overhead incurred - Overhead applied ]
Department D [ 148500 - 126000 ]	22500	Underapplied
Department E [ 186000 - 231000 ]	45000	Overapplied
Department K [ 118500 - 93870 ]	24630	Underapplied