7-31

Yarra Fabrication estimates that its manufacturing overhead will be $2,336,000 in year 1. It further estimates that direct material costs will amount to $1,460,000. During July, Yarra worked on four jobs with actual direct materials costs of $75,000 for Job 0701, $100,000 for Job 0702, $130,000 for Job 0703, and $65,000 for Job 0704. Actual manufacturing overhead costs for the year were $2,475,000. Actual direct materials costs were $1,625,000. Manufacturing overhead is applied to jobs based on direct materials cost using predetermined rates.

Required:

a. How much overhead was applied to each of the four jobs, 0701, 0702, 0703, and 0704?

b. What was the over- or underapplied manufacturing overhead for year 1?