4-17 Overhead Application and Year-End Disposition (D. Jacque Grinnell) A manufacturing company is divided into three producing departments, A, B, and C.

All production is to customer’s order. Budgeted manufacturing costs for 19_1 are as follows:

DEPT. A DEPT. B DEPT. C TOTAL Direct material $170,000 Direct labor $40,000 $20,000 $60,000 120,000 Manufacturing overhead 10,000 40,000 30,000 80,000 The actual material and labor cost of producing a particular order (orderManufacturing overhead is applied to product on the basis of direct-labor cost. Overhead rates are predetermined at the beginning of the year using annual budget data.
1. Determine the total manufacturing cost associated with order # 162 assuming

(a) a factorywide manufacturing overhead rate is used to apply cost to product and

(b) departmental rates are used to apply cost to product.
2. Actual manufacturing costs for 19_1 were as follows:
#162) during 19_1 was as follows:
Direct material $1,500 Direct labor:
Dept. A $200 Dept. B 190 Dept. C _240 630 DEPT. A DEPT.B DEPT. C TOTAL Direct material $180,000 Direct labor $44,000 $19,000 $72,000 135,000 Manufacturing overhead 12,000 36,000 39,000 87,000 Determine the under- or overapplied overhead for the year assuming:

a. The use of the factorywide overhead rate.

b. The use of the departmental overhead rates.
3. Consider the information provided in requirement (2) above. Assume the firm chose to use departmental rates to apply overhead to product. Also assume that at the beginning of 19_1 there were no work-in-process or finished-goods inventories. At the end of 19_1 the work-in-process and finished-goods inventories were represented by the following balances:
Work in process $19,500 Finished goods 60,500 The balances include actual direct-material costs, actual direct-labor costs, and applied overhead costs; that is, no year-end adjustments have been made for under- or overapplied overhead. Assuming the company desires to prorate under- or overapplied overhead between ending inventories and cost of goods sold in proportion to their unadjusted balances, compute the correct prorated amount to be assigned to cost of goods sold.