Sorrento Products uses a job costing accounting system for its manufacturing costs. A predetermined overhead rate based on machine-hours is used to apply overhead to individual jobs. An estimate of overhead costs at different volumes was prepared for the current year as follows.

The expected volume is 200,000 machine-hours for the entire year. The following information is for March, when jobs 302 and 304 were completed: 

Required

Answer the following questions:

a. Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year. (Note: Regardless of your answer to requirement [a], assume that the predetermined overhead rate is $12 per machine-hour. Use this amount in answering requirements [b] through [f], as needed.)

b. Compute the total cost of Job 302 when it is finished.

c. How much of factory overhead cost was applied to Job 305 during March?

d. What total amount of overhead was applied to jobs during March?

e. Compute actual factory overhead incurred during March.

f. At the end of the year, Sorrento Products had the following account balances:

How would you recommend treating the underapplied overhead? Show the effect on the account balances in the following table: 

Transcribed Image Text:

Machine-hours. Variable overhead costs..... Fixed overhead costs Total overhead...... 180,000 200,000 240,000 $ 684,000 $760,000 $912,000 1,440,000 1,440,000 $2,200,000 $2,352,000 1,440,000 $2,124,000