Question

In: Accounting

Blossom Company uses a job order cost system in each of its three manufacturing departments. Manufacturing...

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 $1,400,000 $1,250,000 $720,000
Direct labor costs $2,000,000 $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 $100,000 $79,000
Direct labor hours 8,000 11,000 3,500
Machine hours 34,000 45,000 10,300

1. 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

2. Compute the total manufacturing costs assigned to jobs in January in each department.

Manufacturing Costs

Department D $
Department E $
Department K $

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

Manufacturing Overhead

Choose from:

Department D $

UnderappliedOverapplied

Department E $

UnderappliedOverapplied

Department K $

OverappliedUnderapplied

Solutions

Expert Solution

  • All working forms part of the answer
  • [1]

Working

D

E

K

A

Manufacturing Overhead

$1,400,000

$1,250,000

$720,000

Allocation base

Direct Labor cost

Direct Labor hours

Machine hours

B

Amount of allocation base

$2,000,000

                                   125,000

                               120,000

C = A/B

Predetermined Overhead rate

70%

$10.00

$6.00

  • [2]

Direct Material used

Direct Labor Cost

Manufacturing Overhead applied

Total manufacturing cost

Department D

$140,000

$120,000

$84,000

[$ 120000 x 70%]

$344,000

Department E

$126,000

$110,000

$110,000

[11000 direct labor hours x $ 10]

$346,000

Department K

$78,000

$37,500

$61,800

[10300 machine hours x $ 6]

$177,300

  • [3]

Actual manufacturing Overhead

Manufacturing Overhead applied

Manufacturing Overhead

Department D

$99,000

$84,000

$15,000

Under applied

Department E

$100,000

$110,000

$10,000

Over applied

Department K

$79,000

$61,800

$17,200

Under applied


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