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The Garriga printing press uses a job order cost system to record business costs. Each order...

The Garriga printing press uses a job order cost system to record business costs. Each order of a customer is treated as a separate job.

Indirect costs are allocated based on the work hours required by the client's order. If indirect costs are over-allocated or under-allocated (overapplied or underapplied), the difference is taken against the cost of goods sold because it is usually not significant.

The data for the current year is listed below.

Estimated indirect or general costs for 2019: $ 860,000

Actual indirect costs incurred in 2019: $ 879,000

Total estimated hours of work at the beginning of 2019: 50,000

Total actual work hours incurred during 2019: 52,000

  

Required (use points to indicate decimal points).

1. Calculate the default indirect cost rate (use points to indicate decimal points).

$
per hour

2. Calculate the indirect costs assigned (applied) (use points to indicate decimal points and commas to separate thousands).

$

3. Indicate whether indirect costs were under-allocated or over-allocated. (Answer by typing SUB or ENVELOPE, in capital letters).


4. Indicate how much indirect costs were under-allocated or over-allocated. . (use points to indicate decimal points).

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Expert Solution

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The Garriga printing
Answer 1 Amount $ Note
Estimated indirect or general costs for 2019 860,000.00 A
Total estimated hours of work at the beginning of 2019      50,000.00 B
The default indirect cost rate             17.20 C=A/B
Answer 2 Amount $ Note
Total actual work hours incurred during 2019      52,000.00 D
The default indirect cost rate             17.20 See C
The indirect costs assigned (applied) 894,400.00 E=C*D
Answer 3 Amount $ Note
Actual indirect costs incurred in 2019 879,000.00 F
The indirect costs assigned (applied) 894,400.00 See E
So indirect costs were over-allocated as costs applied is greater than costs incurred. Because E is > F.
Answer 3 Amount $ Note
The indirect costs assigned (applied) 894,400.00 See E
Actual indirect costs incurred in 2019 879,000.00 See F
Indirect costs were over-allocated by     15,400.00 G=E-F

ekkarill92 answered 1 year ago
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