7-55 (Algo) Analysis of Overhead Using a Predetermined Rate (LO 7-2, 3) Whitlock Manufacturing uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct materials costs to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows: Direct materials costs $ 330,000 $ 418,000 $ 530,000 Variable overhead costs $ 475,200 $ 619,200 $ 763,200 Fixed overhead costs 384,000 384,000 384,000 Total overhead $ 859,200 $ 1,003,200 $ 1,147,200 Whitlock expects to spend $418,000 in direct materials costs over the entire year. The following information is for May, when Jobs WM-52 and WM-53 were completed: Inventories, May 1 Materials and supplies $ 3,000 Work in process (Job WM-52) 15,500 Finished goods 30,100 Purchases of materials and supplies Materials $ 35,800 Supplies 4,200 Materials and supplies requisitioned for production Job WM-52 $ 13,300 Job WM-52 9,800 Job WM-54 6,800 Supplies 1,900 $ 31,800 Factory direct labor-hours (DLH) Job WM-52 900 DLH Job WM-53 750 DLH Job WM-54 500 DLH Labor costs Direct labor wages (all hours @ $22.00) $ 47,300 Indirect labor wages (500 hours) 8,000 Supervisory salaries 9,400 Building occupancy costs (heat, light, depreciation, etc.) Factory facilities $ 24,500 Sales and administrative offices 12,500 Factory equipment costs Power $ 14,000 Repairs and maintenance 8,900 Other 13,500 $ 36,400 Required: 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 225% of direct materials cost. Use this rate in answering requirements [b] through [f], as needed.) Compute the total cost of Job WM-52 when it is finished. How much of factory overhead cost was applied to Job WM-54 during May? What total amount of overhead was applied to jobs during May? Compute actual factory overhead incurred during May. At the end of the year, Whitlock Manufacturing had the following account balances: Underapplied overhead $ 52,000 Work-in-process inventory 23,800 Finished goods inventory 196,300 Cost of goods sold 1,863,900 Assuming that the underapplied overhead is not material, show the new account balances in the following table