Question

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

      

	Department
	Preparation				Fabrication
Machine-hours		83,000				37,000
Direct labor-hours		30,500				52,300
Direct materials cost	$	191,000			$	201,000
Direct labor cost	$	275,000			$	519,000
Fixed manufacturing overhead cost	$	240,700			$	491,620
Variable manufacturing overhead per machine-hour	$	2.40				-
Variable manufacturing overhead per direct labor-hour		-			$	4.40

Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

	Department
	Preparation					Fabrication
Machine-hours		350				72
Direct labor-hours		73				135
Direct materials cost	$	948			$	1,180
Direct labor cost	$	710			$	980
1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.) Predetermined Overhead Rate Preparation department per MH Fabrication department per DLH 2. Compute the total overhead cost applied to Job 127. (Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.) Total overhead cost 3-a. What would be the total cost recorded for Job 127? (Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.) Department Preparation Fabrication Total Direct materials Direct labor Manufacturing overhead Total cost $0 $0 $0

3-b. If the job contained 25 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.)

	Unit product cost per unit

4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round predetermined overhead rate to 2 decimal places.)

      

	Department
	Preparation				Fabrication
Machine-hours		82,600				24,300
Direct labor-hours		34,000				52,000
Direct materials cost	$	161,200			$	425,000
Manufacturing overhead cost	$	448,780			$	681,300
What was the amount of underapplied or overapplied overhead in each department at the end of the year? Preparation Department Fabrication Department

Answer 1

1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.)

	Predetermined Overhead Rate Preparation department (240700/83000+2.40) = 5.30 per MH Fabrication department (491620/52300+4.40) = 13.80 per DLH

2) Total overhead cost applied = (5.30*350+13.80*135) = $3718

3a) What would be the total cost recorded for Job 127?(Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.)

	Department
	Preparation	Fabrication	Total
Direct materials	948	1180	2128
Direct labor	710	980	1690
Manufacturing overhead	1855	1863	3718
Total cost	$3513	$4023	$7536

3-b. If the job contained 25 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.)

Unit product cost = 7536/25 = $301.44

the amount of underapplied or overapplied overhead in each department at the end of the year

Preparation department = (82600*5.30)-448780 = 11000 Under applied

Fabrication department = (52000*13.80)-681300 = 36300 over applied