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Problem 2-4A (Video) Agassi Company uses a job order cost system in each of its three manufacturing departments
Problem 2-4A (Video)
In establishing the predetermined overhead rates for 2020, the following estimates were made for the year.
|
Department
|
||||||
|
D
|
E
|
K
|
||||
| Manufacturing overhead | $854,000 | $1,500,000 | $1,020,000 | |||
| Direct labor costs | $1,220,000 | $1,875,000 | $675,000 | |||
| Direct labor hours | 150,000 | 125,000 | 60,000 | |||
| Machine hours | 600,000 | 750,000 | 120,000 | |||
During January, the job cost sheets showed the following costs and production data.
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Department
|
||||||
|
D
|
E
|
K
|
||||
| Direct materials used | $210,000 | $189,000 | $117,000 | |||
| Direct labor costs | $180,000 | $165,000 | $56,250 | |||
| Manufacturing overhead incurred | $148,500 | $186,000 | $118,500 | |||
| Direct labor hours | 12,000 | 16,500 | 5,250 | |||
| Machine hours | 51,000 | 67,500 | 10,390 | |||
Compute the predetermined overhead rate for each department. (Round answers to 2 decimal places, e.g. 12.50 or 12.50%.)
Compute the total manufacturing costs assigned to jobs in January in each department.
Compute the under- or overapplied overhead for each department at January 31.
Expert Solution
Department D:$854,000 ÷ $1,220,000 = 70.00% of direct labor cost.Department E:$1,500,000 ÷ 125,000 = $12.00 per direct labor hour.Department K:$1,020,000 ÷ 120,000 = $8.50 per machine hour.
|
Department
|
|||||||
|
Manufacturing Costs
|
D
|
E
|
K
|
||||
| Direct materials | $210,000 | $189,000 | $117,000 | ||||
| Direct labor | 180,000 | 165,000 | 56,250 | ||||
| Overhead applied | 126,000 | * | 198,000 | ** | 88,315 | *** | |
| Total | $516,000 | $552,000 | $261,565 | ||||
| *$180,000 x 70.00% | = | 126,000 |
| **16,500 x $12.00 | = | 198,000 |
| ***10,390 x $8.50 | = | 88,315 |
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Department
|
||||||
|
Manufacturing Overhead
|
D
|
E
|
K
|
|||
| Incurred | $148,500 | $186,000 | $118,500 | |||
| Applied | 126,000 | 198,000 | 88,315 | |||
| Under (over) applied | $22,500 | ($12,000) | $30,185 | |||
| Underapplied | Overapplied | Underapplied | ||||
[(D: $148,500 – ($120,000 x 70.00%) = $22,500); (E: $186,000 – (16,500 x $12.00) = ($12,000)); (K: $118,500 – (10,390 x $8.50) = $30,185)]
[(D: Act. MOH – (DL cost x Predet. MOH rate) = Underapp. MOH); (E: Act. MOH – (Act. DL hrs. x Predet. MOH rate) = Overapp. MOH); (K: Act. MOH – (Act. MH x Predet. MOH rate) = Underapp. MOH)]
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