Question

Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $184,000. Estimated direct labor cost was $425,040 for 18,400 hours.

Actual costs for the most recent month are summarized here:   

Item Description	Total Cost
Direct labor (1,840 hours)	$	42,505
Indirect costs
Indirect labor		2,450
Indirect materials		3,500
Factory rent		3,270
Factory supervision		4,890
Factory depreciation		5,760
Factory janitorial work		1,290
Factory insurance		1,780
General and administrative salaries		4,140
Selling expenses		5,420

Required:
1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.)



2. Calculate the amount of applied manufacturing overhead.



3. Calculate actual manufacturing overhead costs.



4. Compute over- or underapplied overhead. (Input the amount as positive value.)

Answer 1

Requirement 1

Estimated Manufacturing overheads	$ 1,84,000.00
Estimated direct labor Hours	18400
Predetermined overhead rate	$             10.00 per Labor hour

Requirement 2

Predetermined overhead rate	$             10.00
Actual Hours	1840
Manufacturing overheads applied	$     18,400.00

Requirement 3

Indirect labor	$      2,450.00
Indirect materials	$      3,500.00
Factory rent	$      3,270.00
Factory supervision	$      4,890.00
Factory depreciation	$      5,760.00
Factory janitorial work	$      1,290.00
Factory insurance	$      1,780.00
Total Actual Manufacturing Overheads	$    22,940.00

Requirement 4

Total Manufacturing Overheads	$    22,940.00
Manufacturing overheads applied	$      18,400.00
Underapplied Manufacturing overheads	$        4,540.00