Applying Manufacturing Overhead Valtec Company has three manufacturing divisions (listed below). Each division has its own job order costing system and forecasts the following manufacturing costs for the year 2009:

The predetermined overhead rates for each division are based on the following:
Wayne Division: Machine hours Monroe Division: Materials to be used Yates Division: Direct labor hours 1. Compute the predetermined overhead rate to be used in 2009 by each division.
2. If the Wayne Division actually had 37,000 machine hours and $49,000 of manufacturing overhead, will overhead be over- or underapplied and by how much?
3. If the Monroe Division used 95,000 pounds of materials in 2009, what will be the applied manufacturing overhead?
4. Interpretive Question: Of the two commonly used methods to dispose of over- or underapplied manufacturing overhead, which method would you recommend and why?

Transcribed Image Text:

Division Wayne Monroe Yates Materials to be used (lbs) Direct labor hours 120,000 100,000 80,000 45,000 60,000 25,000 Machine hours 40,000 25,000 15,000 Total budgeted manufacturing overhead $50,000 $70,000 $45,000