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The QuickRead Manufacturing Company uses a Job Order Costing System to record production costs. Overheads are...

The QuickRead Manufacturing Company uses a Job Order Costing System to record production costs. Overheads are applied to each job on the basis of direct labour hours. Information pertaining to this company for 2014 is as follows: Estimated Labour Hours 62,000 hours Estimated Factory Overheads $ 310,000 Actual Expenses for December were: Direct Materials Used $ 62,000 Direct Labour Incurred (3,500 hours) $ 33,600 Factory Utilities $ 2,500 Equipment Depreciation $ 3,000 Indirect Labour & Materials $ 6,200 Other overheads $ 8,000 Required: a. Compute the pre-determined overhead application rate. b. Compute the amount of overheads applied to production for the month of January. c. Determine the over- or under-applied overhead for January.

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Expert Solution

Requirement a

calculation of Predetermined Overhead rate

(A)

Estimated Overhead cost

$   3,10,000.00

(B)

Total Estimated Direct labor Hours

62000.00

(A/B)

Predetermined Overhead rate

$                 5.00

Requirement b

Overheads applied

(A)

Direct labor hours in December

3500

(B)

Predetermined Overhead rate

$ 5.00

(A x B)

Overheads Applied

$ 17,500.00

Requirement c

Actual overheads

Factory Utilities

$    2,500.00

Equipment Depreciation

$    3,000.00

Indirect labor and material

$    6,200.00

Other Overheads

$    8,000.00

Total Actual Overheads

$ 19,700.00

Applied Overheads

$ 17,500.00

Overheads Under- applied

$    2,200.00

ekkarill92 answered 1 year ago
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