Northern Lights Corporation uses a job-order costing system for its production costs. A predetermined cost-driver rate based on machine hours is used to apply facility-level overhead to individual jobs. An estimate of overhead costs at different volumes was prepared for the current year as follows:

MAC nine MOULSis. aaae ee deeetetitreanna 55,000 60,000 65,000 Unit-level overhead COStS.........cccceee $385,000 $420,000 $455,000 Facility-level overhead costs............... 216,000 216,000 216,000 Total overhead ...asicleln.: log faeree lae $601,000 $636,000 $67 1,000 The expected volume is 60,000 machine hours for the entire year. The following information is for November, when jobs 50 and 51 were completed:

Inventories, November 1 Raw materials and SUDPIICS........0..cccnevcnnesvsneeeveneeons $ 10,500 NVOnKGim-DrOCESSi (JOD: SO) rasmea naaneeeeesn. art s 54,000 Finishedigoods tw ae eae ae A 112,500 Purchases of raw materials and supplies VOW GINA efile Sheet ee etat tee coca sy ene omens noes eeeae $135,000 SU DULESSHeeMe. sacs Acker ete Urcnaitced mp vataoencesupse iss 15,000 Materials and supplies requisitioned for production ROL O Maree Pee ree Park: non Meee ter. ctr Su seen asians etidgeumesuasrent $ 45,000 COJ OU PA ces ccereen lather oat etret et e tho, Soars see PRE NSC 37,500 FITOLO NS ER Lersntsoe 21S oT GHEE Rea ner Bee eer SS etaa rte Si a 25,500 SUa lS Oe erent Re atiterrgs conis dncciiccounssubeendhcututinetes 6,000 SU tatall PM ane eae tee eee eecetet ease ncsee tues vecetemaeaecntaaineuc $114,000 Exercise 3.44 Job Costing in a Service Organization

(LO 3,7)

Exercise 3.45 Job-Order Costing for Feature Film Production;

Internet

{LO 1)

Problem 3.46 Cost Flows

(LO 2,3,5)

Problem 3.47 129 Analysis of Overhead Using a Predetermined Rate

{LO'2,3,5)

eXcel .

mhhe.com/hilton4eJob Direct-Labor Hours (DLH) Production Machine Hours (MH)

ODES ORR, cokrcc eect see eee entree Rea me 2,000 DLH 3,500 MH JODRSILR haa ecektas eat ee eee mer ese 3,000 DLH 3,000 MH JODO 2 tetereri eese em er 3,500 DLH 2,000 MH Labor costs:

Production labor wages (all hours @ $8)........ccceee Fisk sea a reenter $ 68,000 SUpOOntlabOr Wages (4; OOOIMOUIS) ccrceseseese este seateneagee reyes corte mits aaa ercet 17,000 SUD ERVISORY:SAIANIOS orn wiancasceseuceucadoonatenheerteemneecnen enesstesc ermeRmactA nsm eeena neons 36,000 SUDO ee ere gosta ttuatan cee cena tire cout ne cas car eee ee ee ee $121,000 Building occupancy costs (heat, light, depreciation, etc.): tos ie.

FACtory TACIIITSS i cc7 sas cpc see cee PE ME RC CRUG TI isd Sehr ae yr ales pel $ 6,500 SalesrangkacimiMStrative ONICSSssreseeusc tetere teeet te eeeae rpeatet eeee ;ea e 2,500 SU total aie ee ome thee ae eters aga a dna eage e eeke ind oe a a $ 9,000 Factory equipment costs:

OWE Pee tc ee eel mete Aes trees cba, tal aia onan aoe Leen ee er cater $ 3,900 REDAIES ANGUIMAINIGMANCE ret atone eecnsetepes dt co talurras aa charpescset sua teet re smeerece-G 1,400

(©) lol eer aneeee rene Renn etna Ray Sooaaiie pees are na aera pcoaa Mrschicasecse 2,700 SUB ECT teeta Rate ies aie Se anes SC LP nes net mene an $ 8,000 Required

a. Compute the predetermined cost-driver rate (combined unit and facility) to use to apply overhead to individual jobs during the year.

[Note: Without prejudice to your answer to requirement (a), assume that the predetermined costdriver rate is $9 per machine hour. Use this amount in answering requirements

(b) through (e).]

Compute the total cost of job 50 when it is finished.

Compute the overhead costs applied to job 52 during November.

Compute the total amount of overhead applied to jobs during November.

Compute the actual factory overhead incurred during November.

moAet tahe een d of the year, the company had the following account balances:

Overapplied overhead ...........cccccceeeeeteeeees $

COSHONGCOdS:SOlCtea eteasmtaernsc e re:

Work-in-ProCeSS INVENLOLY..........ceeereseetnreeee FIniShEd-GOOdS INVENTOFY......-..s.ces-nreasaereesenrs 1,000 980,000 38,000 82,000 What is the most common treatment of the overapplied overhead, assuming that it is not material?