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Verizox Company uses a job order cost system with manufacturing overhead applied to products based on...

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 $178,560. Estimated direct labor cost was $431,520 for 18,600 hours.

Actual costs for the most recent month are summarized here:   

Item Description Total Cost
Direct labor (1,860 hours) $ 43,153
Indirect costs
Indirect labor 2,500
Indirect materials 3,360
Factory rent 3,260
Factory supervision 4,870
Factory depreciation 5,790
Factory janitorial work 1,280
Factory insurance 1,830
General and administrative salaries 4,250
Selling expenses 5,380

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.)

Solutions

Expert Solution

1. Calculate the predetermined overhead rate.

Predetermine overhead rate = Estimated overhead/estimated labour hour

                                         = 178560/18600

Predetermine overhead rate = 9.6 per labour hour

2. Calculate the amount of applied manufacturing overhead.

Applied overhead = 1860*9.6 = 17856

3. Calculate actual manufacturing overhead costs.

Indirect labour 2500
Indirect material 3360
Factory rent 3260
Factory supervision 4870
Factory depreciation 5790
Factory janitorial work 1280
Factory insurance 1830
Total actual manufacturing overhead 22890

4. Compute over- or underapplied overhead.

Over /under Applied overhead = Applied overhead-actual overhead

                                             = 17856-22890

under applied overhead = 5034

ekkarill92 answered 1 year ago
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