In: Accounting
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 |
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 |
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 |
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 |