Question

Problem 20-04A a-c (Video) Blossom 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 2020, the following estimates were made for the year. Department D E K Manufacturing overhead $959,000 $1,500,000 $720,000 Direct labor costs $1,370,000 $1,250,000 $450,000 Direct labor hours 100,000 125,000 40,000 Machine hours 400,000 500,000 120,000 During January, the job cost sheets showed the following costs and production data. Department D E K Direct materials used $140,000 $126,000 $78,000 Direct labor costs $120,000 $110,000 $37,500 Manufacturing overhead incurred $99,000 $124,000 $79,000 Direct labor hours 8,000 11,000 3,500 Machine hours 34,000 45,000 10,410

Compute the predetermined overhead rate for each department. (Round answers to 2 decimal places, e.g. 12.50 or 12.50%.) Overhead rate Department D % Department E $ per direct labor hour Department K $ per machine hour LINK TO TEXT LINK TO TEXT

Compute the total manufacturing costs assigned to jobs in January in each department. Manufacturing Costs Department D $ Department E $ Department K $ LINK TO TEXT LINK TO TEXT

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

Answer 1

Predetermined overhead rate - Department D      = Manufacturing overhead / Direct labor costs	$ 959,000 / $ 1,370,000	70	%
Predetermined overhead rate - Department E           = Manufacturing overhead / Direct labor hours	$ 1,500,000 / 125,000 DLH	$ 12	per direct labor hour
Predetermined overhead rate - Department K            Manufacturing overhead / Machine hours	$ 720,000 / 120,000 MH	$ 6	per machine hour
	Department D	Department E	Department K
Direct material Used	$ 140,000	$ 126,000	$ 78,000
Direct labor Cost	$ 120,000	$ 110,000	$ 37,500
Overhead Cost	$ 84,000 ( $ 120,000 x 70% )	$ 132,000 ( 11,000 DLH x $ 12)	$ 62,460 (10,410 MH x $ 6)
Total Manuafcturing Cost	$ 344,000	$ 368,000	$ 177,960
Particulars	Department D	Department E	Department K
Applied Overhead (-) Actual Overhead	($ 15,000 ) Under applied	$ 8,000 - Over Applied	($ 16,540 ) Under applied
	( $ 344,000 (-) $ 359,000)	( $ 368,000 (-) $ 360,000)	( $ 177,960 (-) $ 194,500 )
Actual Overhead	$ 359,000 ($ 140,000 + $ 120,000 +$ 99,000)	$ 360,000 ( $ 126,000 + $ 110,000 + $ 124,000)	$ 194,500 ( $ 78,000 + $ 37,500 + $ 79,000)