17.3

Dawn Manufacturing applies manufacturing overhead at a rate of $40 per direct labor hour.

a. When during the year was this rate computed?

: Beginning of the Accounting Period.

b. Describe briefly how this rate was computed.

c. Identify the shortcomings of this rate that will cause overhead applied during the period to

differ from the actual overhead costs incurred during the period.

17.4

Morris Corporation applies manufacturing overhead to jobs at a rate of $50 per direct labor hour. During the current period, actual overhead costs totaled $240,000, and 5,000 direct labor hours were worked by the company's employees.

a. Record the journal entry to close the Manufacturing Overhead account directly to Cost of

Goods Sold at the end of the period.

b. Was manufacturing overhead overapplied, or was it underapplied?

17.5

Indicate whether job order costing is appropriate for each of the following businesses. Explain

why.

a. Old Home Bakery, Inc. (a bakery that produces to order).

: Job order costing is appropriate because costs can be traced to individual customer orders.

b. Baxter, Claxter, and Stone, CPAs.

: Job order costing is appropriate because most costs can be traced directly to particular

c. Thompson Construction Company.

d. Satin Wall Paints, Inc.

e. Apache Oil and Gas Refinery.

f. Dr. Carr's Auto Body Shoppe.

g. Health-Rite Vitamins.

h. Shampoo Products International.