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## Predetermined Rate...

( 1 ) Proposal

Sarah

Accounting

2015-02-01 23:09:01

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WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

Department

Preparation
Fabrication

Machine-hours
84,000
39,000

Direct labor-hours
36,000
52,700

Direct materials cost
\$186,000
\$196,000

Direct labor cost
\$286,000
\$511,000

\$268,800
\$495,380

\$2.40
-

Variable manufacturing overhead per direct labor-hour
-
\$4.40

Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

Department

Preparation
Fabrication

Machine-hours
360
74

Direct labor-hours
88
127

Direct materials cost
\$932
\$1,220

Direct labor cost
\$740
\$960

Required:

1.

Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round your answers to 2 decimal places.)

2.

Compute the total overhead cost applied to Job 127. (Round your intermediate calculations to two decimal places.)

3-a.

What would be the total cost recorded for Job 127? (Round your intermediate calculations to two decimal places.)

3-b.

If the job contained 32 units, what would be the unit product cost? (Round your intermediate calculations and final answer to 2 decimal places.)

4.

At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round your intermediate calculations to 2 decimal places.)

Department

Preparation
Fabrication

Machine-hours
83,800
24,400

Direct labor-hours
29,000
51,000

Direct materials cost
\$164,700
\$430,000

\$478,980
\$667,400

What was the amount of underapplied or overapplied overhead in each department at the end of the year?

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