Question

Agass Company uses a job order cost system in each。its thre manufacturing departments. Manufacturing are e d is applied to abs on the basis of direct labor cost in epartment direct abor hours in epartmen E and machin hours in epartment In establishing the predetermined overhead rates for 2017, the following estimates were made for the year. Marnufacturing overhead Direct labar costs Direct labor hours Machine hours $1,260,a0o $1,625,000 $960,000 $1,800,000 $1,375,000 $45,000 44,000 550,000 120,000 110,000 125,000 440,000 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 $154,000 $138,600 $85,800 132,000 $121,000 41,250 136,400 8,900 12,100 3,B 37,400 49,500 10,390 106,900 36,900 Compute the predetermined averhead rate for each departnent. (Round ansivers to 2 decimal places,e.g. 10.25.) Overhead rate per direct labor hour Department K per machine haur

Answer 1

Answer:

1

Compute the predetermined overhead rate for each department.

Department D: $1,260,000/$1,800,000 = 80% direct cost

Department E: $1,625,000/125,000 = $13 per direct labor hours

Department K: $960,000/120,000 = $8

Department D	70%
Department E	13
Department K	8

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2

Compute the total manufacturing costs assigned to jobs in January in each department.

Manufacturing Costs	Department D	Department E	Department K
Direct Materials	154000	138600	85800
Direct labor	132000	121000	41250
Overhead applied	92400	157300	83120
	(132000*70%)	(12100*13)	(10390*8)
Manufacturing Costs	378400	416900	210170

Department D	378400
Department E	416900
Department K	210170

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3

Compute the under- or over-applied overhead for each department at January 31.

Manufacturing Costs	Department D	Department E	Department K
Incurred	108900	136400	86900
Applied	92400	157300	83120
Under applied/ over applied	16500	-20900	3780

	Manufacturing Costs
Department D	16500	under applied
Department E	-20900	Over applied
Department K	3780	under applied