Multiple Departments; Applying Overhead [LO1, LO2, LO3, LO7]

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machinehours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

Job 127 was started on April 1 and completed on May 12. The company’s cost records show the following information concerning the job:

Required:
1. Compute the predetermined overhead rate used during the year in the Preparation Department.
Compute the rate used in the Fabrication Department.
2. Compute the total overhead cost applied to Job 127.
3. What would be the total cost recorded for Job 127? If the job contained 25 units, what would be the unit product cost?
4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year:

What was the amount of underapplied or overapplied overhead in each department at the end of the ye ar?

Transcribed Image Text:

Machine-hours... Direct labor-hours. Direct materials cost. Direct labor cost... Fixed manufacturing overhead cost... Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Preparation Fabrication 80,000 21,000 35,000 50,000 $190,000 $400,000 $280,000 $530,000 $256,000 $520,000 $2.00 $4.00