Chris Company has four manufacturing subsidiaries (listed below). Each subsidiary keeps a separate set of accounting records. Manufacturing cost forecasts for 2012 for each subsidiary are:

The predetermined overhead rates for each subsidiary are based on the following:
Tulare Subsidiary: Machine hours
Fresno Subsidiary: Direct labor costs
Kings Subsidiary: Materials to be used
Kern Subsidiary: Direct labor hours
1. Compute the predetermined overhead rate to be used in 2012 by each subsidiary.
2. If the Fresno Subsidiary actually had $4,000 of direct labor costs and $15,750 of manufacturing overhead, will overhead be over- or under-applied and by how much?
3. If the Kings Subsidiary used 33,000 pounds of materials in 2012, what will be the applied manufacturing overhead?
4. Interpretive Question: Identify the two most commonly used methods to dispose of under or over-applied manufacturing overhead. What is the major advantage of eachmethod?

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Subsidiaries Fresno 50,000 Tulare Kings 40,000 13,500 S1,875 4,750 Kern 50,000 25,350 Materials to be used (Ibs.) Direct labor hours Direct labor costs Machine hours Manufacturing overhead 14,000 19,000 19,000 $3,500 $6,000 $6,000 20,000 13,500 $30,000 $25,000 $10,000 $50,000