NH Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a...

NH Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead and direct labor-hours were estimated at $80,000 and 16,000 hours respectively, for the year. In June, Job #300 was completed. Materials costs on the job totaled $1,500 and labor costs totaled $2,400 at $6 per hour. At the end of the year, it was determined that the company worked 15,000 direct labor-hours for the year, and incurred $78,000 in actual manufacturing overhead costs. Required a. Determine the predetermined overhead rate for the year.________________ b. Determine the amount of overhead charged to ALL jobs during the year. _________________ c. Determine the amount of underapplied or overapplied overhead for the year._________________ d. Assuming that 100 units were completed, determine the unit cost that would appear on the job cost sheet for Job #300.

Expert Solution

a. Predetermined overhead rate is based on estimated direct labor hours.

Predetermined overhead rate = Estimated total overhead cost / Estimated total direct labor-hours = $80,000 / 16,000 hours = $5 per direct labor hour

b. Total actual direct labor hours worked for the year = 15,000 hours

Total amount of overhead charged / applied to all jobs during the year = Total actual direct labor hours worked for the year * Predetermined overhead rate = 15,000 hours * $5 = $75,000

c. Actual maunfacturing overheads incurred for the year = $78,000

Here, the manufacturing overhead applied ( i.e.$75,000 ) are less than the actual manufacturing overheads incurred ( i.e.$78,000 ), hence the overheads are underapplied

Underapplied manufacturing overhead = Actual manufacturing overhead incurred - Manufacturing overheads applied = $78,000 - $75,000 = $3,000

d. Job #300

First let us calculate direct labor hours worked on Job #300

Direct labor cost on Job #300 totaled $2,400 at $6 per hour

Direct labor hours worked on Job #300 = Direct labor cost incurred on Job #300 / Rate per direct labor hour = $2,400 / $6 = 400 hours

Particulars	Total cost	Per unit [ Total cost / 100 units ]
Direct materials	$1,500	$15
(+) Direct labor	$2,400	$24
(+) Overheads applied [ direct labor hours worked * predetermined overhead rate = 400 hours * $5 ]	$2,000	$20
Product cost	$5,900	$59

Thus, unit cost of Job #300 is $59 per unit

ekkarill92 answered 1 year ago

1. Benner Company uses a job-order costing system and applies manufacturing overhead to jobs using a...

1. Benner Company uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor hours. Manufacturing overhead and direct labor hours were estimated at $66,000 and 22,000 hours, respectively. In June, Job #461 was completed. Materials costs on the job totaled $4,923 and labor costs totaled $2,325 at $7.50 per hour (310 hours worked on this job). At the end of the year, it was determined that the company worked 23,975...

The Collins Company uses a job-order costing system and applies manufacturing overhead cost to jobs on...

The Collins Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of materials used in production. At the beginning of the most recent year, the following estimates were made as a basis for computing the predetermined overhead rate for the year: Manufacturing overhead cost: $200,000 Direct materials cost: $160,000 The following transactions took place during the year (all purchases and services were acquired on account): a.) Raw materials purchased: $86,000....

hardwood company uses a job order costing system that applies overhead cost to jobs on the...

hardwood company uses a job order costing system that applies overhead cost to jobs on the basis of machine hours. The companys predetermined overhead rate of $2.50 Per machine hour was based on the cost formula that estimates $237,500 of total manufacturing overhead for an estimated activity level of 95,000 machine hours. 1. Manufacturing Overhead Maintenance 36,000 ??? (a) Indirect Materials 9,500 Indirect Labor 75,000 Utilities 44,000 Insurance 8,500 Depreciation 56,000 Balance: ??? Work in Process: Direct Materials 860,000 Direct...

Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on...

Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 25,000 machine-hours and incur $118,750 in manufacturing overhead cost. The following transactions occurred during the year: a. Raw materials requisitioned for use in production, $244,000 (70% direct and 30% indirect). b. The following costs were incurred for employee services: Direct Labor $170,000 Indirect Labor $28,000 Sales commisions $20,000...

Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on the...

Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 37,000 machine-hours and incur $159,100 in manufacturing overhead cost. The following transactions occurred during the year: a. Raw materials requisitioned for use in production, $191,000 (75% direct and 25% indirect). b. The following costs were incurred for employee services: Direct labor $ 161,000 Indirect labor $ 19,000 Sales commissions $...

ABC, Corp. is a manufacturing firm that uses job-order costing. The company applies overhead to jobs...

ABC, Corp. is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 50,000 machine-hours and incur $450,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased, $325,000. b. Raw materials were requisitioned for use in production, $175,000 ($100,000 direct and $75,000 indirect). c. The following employee costs...

ABC Company uses a job-order costing system and applies overhead costs to jobs using a plant-wide...

ABC Company uses a job-order costing system and applies overhead costs to jobs using a plant-wide rate of 60% of direct materials cost. ABC Company had four jobs in process at June 1 (Jobs #1, #2, #3, and #4). Information related to the four jobs appears below: Job #1 Job #2 beginning work in process ..... $2,500 $1,900 COSTS ADDED DURING JUNE direct materials .............. $ 800 $ 600 direct labor .................. $ 700 $1,780 Job #3 Job #4 beginning...

Greenway Irrigation Systems uses job order costing and applies manufacturing overhead to individual jobs by using...

Greenway Irrigation Systems uses job order costing and applies manufacturing overhead to individual jobs by using predetermined overhead rates. In the Fabrication Department, overhead is applied on the basis of machine-hours, and in the Installation Department, it is applied on the basis of direct labor hours. At the beginning of the current year, management made the following budget estimates as a step toward determining the overhead application rates. Fabrication Installation Direct labor $ 132,000 $ 300,000 Manufacturing overhead $ 600,000...

Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis...

Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.30 per machine-hour was based on a cost formula that estimates $213,900 of total manufacturing overhead for an estimated activity level of 93,000 machine-hours. Required: 1. Assume that during the year the company works only 88,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts: Compute the amount of overhead...

The Ilarion Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on...

The Ilarion Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $139,500 of manufacturing overhead for an estimated allocation base of $93,000 direct labor dollars. The company has provided the following data. Inventories Beginning Ending Raw materials $ 43,000 $ 18,000 Work in process $ 59,000 $ 43,000 Finished goods $ 85,000 $ 68,000 The following...

Question