Landis Company uses a job order cost system in its manufacturing department. Manufacturing overhead is applied to jobs

Question

Landis Company uses a job order cost system in its manufacturing department. Manufacturing overhead is applied to jobs on the basis of direct labor hours. The following estimates were made for the year: Mfg. Department Manufacturing overhead $1,400,000 Direct labor cost 1,200,000 Direct labor hours 100,000 Machine hours 400,000 During January, the job cost sheets showed the following costs and production data Mfg. Department Direct materials used $128,000 Direct labor cost 135,000 Manufacturing overhead incurred 130,000 Direct labor hours 8,400 Machine hours 34,000 Compute the balance in the Manufacturing Overhead account at the end of January and indicate whether overhead is over- or underapplied. (You must show all work.)

Help In Homework · Accepted Answer

a) Predetermined Overhead Rate = Estimated Manufacturing Overhead/Direct Labor Cost $1,400,000/$1,200,000 116.67% of direct labor cost b) Total Manufacturing Cost: Manufacturing Department Direct Materials Used 128,000 Direct Labor Cost 135,000 Overhead Applied (135000*116.67%) 157500 Total Manufacturing Cost 420,500 c) Manufacturing Department Actual Manufacturing Overhead 130,000 Overhead Applied 157500 Underapplied Manufacturing Overhead 27,500 When actual manufacturing overhead is less than applied the overhead is under applied and vice versa

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Landis Company uses a job order cost system in its manufacturing department

Expert Solution

Archived Solution

a)
	Predetermined Overhead Rate =
	Estimated Manufacturing Overhead/Direct Labor Cost
	$1,400,000/$1,200,000
	116.67%	of direct labor cost

b)	Total Manufacturing Cost:
				Manufacturing Department
	Direct Materials Used			128,000
	Direct Labor Cost			135,000
	Overhead Applied		(135000*116.67%)	157500
	Total Manufacturing Cost			420,500



c)				Manufacturing Department
	Actual Manufacturing Overhead			130,000
	Overhead Applied			157500
	Underapplied Manufacturing Overhead			27,500

	When actual manufacturing overhead is less than applied the overhead is under applied
	and vice versa