Question -
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 labour cost in Department D, direct labour hours in Department E, and machine hours in Department K.
In establishing the predetermined overhead rates for 2016, the following estimates were made for the year.
|
|
Department
|
|
|
D
|
E
|
K
|
|
Manufacturing overhead
|
$1,240,000
|
$1,500,000
|
$720,000
|
|
Direct labour costs
|
$1,550,000
|
$1,250,000
|
$450,000
|
|
Direct labour hours
|
100,000
|
125,000
|
40,000
|
|
Machine hours
|
400,000
|
500,000
|
120,000
|
During January, the job cost sheets showed the following costs and production data.
|
|
Department
|
|
|
D
|
E
|
K
|
|
Direct materials used
|
$140,000
|
$126,000
|
$78,000
|
|
Direct labour costs
|
$120,000
|
$110,000
|
$37,500
|
|
Manufacturing overhead incurred
|
$99,000
|
$124,000
|
$79,000
|
|
Direct labour hours
|
8,000
|
11,000
|
3,500
|
|
Machine hours
|
34,000
|
45,000
|
10,390
|
1. Calculate the predetermined overhead rate for each department.
2. Calculate the total manufacturing costs assigned to jobs in January in each department.
3. Calculate the under- or over-applied overhead for each department at January 31.