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Deglman Manufacturing uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2012, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $25,800, direct labor $15,480, and manufacturing overhead $20,640. As of January 1, Job No. 49 had been completed at a cost of $116,100 and was part of finished goods inventory. There was a $19,350 balance in the Raw Materials Inventory account.

During the month of January, Deglman Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $157,380 and $203,820, respectively. The following additional events occurred during the month.

1. Purchased additional raw materials of $116,100 on account.
2. Incurred factory labor costs of $90,300. Of this amount $20,640 related to employer payroll taxes.
3. Incurred manufacturing overhead costs as follows: indirect materials $21,930; indirect labor $25,800; depreciation expense on equipment $24,510; and various other manufacturing overhead costs on account $20,640.
4. Assigned direct materials and direct labor to jobs as follows.

Job No.
Direct Materials
Direct Labor
50 $12,900 $6,450
51 50,310 32,250
52 38,700 25,800

find out the predetermined overhead rate for 2012, assuming Deglman Manufacturing estimates total manufacturing overhead costs of $1,264,200, direct labor costs of $903,000, and direct labor hours of 25,800 for the year.
Predetermined overhead rate in percent?

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M939929

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