Question

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 2020, the following estimates were made for the year. Department D E K Manufacturing overhead $1,179,000 $1,750,000 $1,080,000 Direct labor costs $1,684,286 $1,875,000 $675,000 Direct labor hours 150,000 125,000 60,000 Machine hours 600,000 750,000 120,000 During January, the job cost sheets showed the following costs and production data. Department D E K Direct materials used $210,000 $189,000 $117,000 Direct labor costs $180,000 $165,000 $56,250 Manufacturing overhead incurred $148,500 $186,000 $118,500 Direct labor hours 12,000 16,500 5,250 Machine hours 51,000 67,500 10,430

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

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

Compute the under- or overapplied overhead for each department at January 31. Manufacturing Overhead Department D $ OverappliedUnderapplied Department E $ UnderappliedOverapplied Department K $ OverappliedUnderapplied

Answer 1

Ans 1	predetermined overhead rate for each department
	Department D =	70.00%
	1179000/1684286
	Department E=	$          14.00	per direct labor hour
	1750000/125000
	Department K=	$            9.00	Per machine hr
	1080000/120000
Ans 2	total manufacturing costs
		D	E	K
	Direct materials used	$210,000	$189,000	$117,000
	Direct labor costs	$180,000	$165,000	$56,250
	Manufacturing overhead incurred
	D =210000*70%	$147,000
	E=14*16500		$231,000
	K =9*10430			$93,870
	total manufacturing costs	$537,000	$585,000	$267,120
Ans 3	under- or overapplied overhead for each department
		a=actual	b=applied	c=b-a over /(under applied)
	Department D	$148,500	$147,000	($1,500)	Under applied
	Department E	$186,000	$231,000	$45,000	Over applied
	Department K	$118,500	$93,870	($24,630)	Under applied