Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing…
The following solution is suggested to handle the subject “Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing…“. Let’s keep an eye on the content below!
Question “Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing…”
Agassi 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 Manufacturing overhead $1,500,000 $720,000 $450,000 Direct labor costs $959,000 $1,370,000 100,000 400,000 Direct labor hours $1,250,000 125,000 500,000 40,000 Machine hours 120,000 During January, the job cost sheets showed the following costs and production data. Department D E Direct materials used $140,000 $126,000 $78,000 Direct labor costs $120,000 $110,000 $37,500 Manufacturing overhead incurred $99,000 $124,000 $79,000 Direct labor hours 8,000 11,000 3,500 Machine hours 34,000 45,000 10,410
Compute the under-or overapplied overhead for each department at January 31. Manufacturing Overhead Department D Department E $ JJJ Department K $
Answer
Calculate the predetermined overhead rate | ||||
Department D | Estimated manufacturing overhead/Direct labor costs | |||
Department D | 959000/1370000 | |||
Department D | 70.00% | |||
Department E | Direct labor hours/estimated overhead for manufacturing | |||
Department E | 1500000/125000 | |||
Department E | 1200.00% | |||
Department K | Manufacturing overhead/Machine Hours | |||
Department K | 720000/120000 | |||
Department K | 600.00% | |||
Calculate overhead applied | ||||
Department D | $84,000 | 120000*70% | ||
Department E | $132,000 | 11000*1200% | ||
Department K | $62,460 | 10410*600% | ||
Over- or under-applicated overhead Department D | Actual overhead – Estimated overhead | |||
Over or under-applicated overhead | 99000-84000 | |||
Under used Department D | $15,000 | |||
Over- or under-applicated overhead Department E | Actual overhead – Estimated overhead | |||
Over or under-applicated overhead | 124000-132000 | |||
Overapplied Department E | $8,000 | |||
Over- or under-applicated overhead Department K | Actual overhead – Estimated overhead | |||
Over or under-applicated overhead | 79000-62460 | |||
Under used Department K | $16,540 | |||
Department D | $15,000 | Below | ||
Department E | $8,000 | More than one applied | ||
Department K | $16,540 | Below | ||
Conclusion
Above is the solution for “Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing…“. We hope that you find a good answer and gain the knowledge about this topic of business.