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A company manufactures furniture & uses job order costing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Dept. 1,
A company manufactures furniture & uses job order costing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Dept. 1, overhead is applied on the basis of machine-hours, in Dept. 2 on the basis of direct labor hours. At the beginning of the current year, management made the following budget estimates to assist in determining the overhead application rate: Dept. 1 Dept. 2 Direct Labor Cost $300,000 $225,000 Direct Labor Hours 20,000 15,000 Manufacturing Overhead $420,000 $337,000 Machine-hours 12,000 7,500 Production of a batch of custom furniture ordered by City Furniture (job no. 58) was started early in the year and completed three weeks later on January 29th. The records for this job show the following cost information: Direct materials cost $10,100 $7,600 Direct labor cost $16,500 $11,100 Direct labor hours 1,100 740 Machine-hours 750 500 Selected addition information for January: Direct labor hours - month of January 1,600 1,200 Machine-hours - month of January 1,100 600 Manufacturing overhead incurred in January $39,010 $26,540 a. Compute the predetermined overhead rate for each department. b. what is the total cost of the furniture produced for City Furniture? c. Prepare the entries required to record the sale (on account) of the furniture to City Furniture. The sales price of the order was $147,000 d. Determined the over- or under applied overhead for each department at the end of January
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