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Adams Technology Inc. has a Job-Order Costing system. The company uses Predetermined Overhead Rates in applying manufacturing overhead cost to individual jobs. The predetermined
Adams Technology Inc. has a Job-Order Costing system. The company uses Predetermined Overhead Rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate in Department #1 is based on Direct Labour Cost, and the rate in Department #2 is based on Direct Labour Hours. At the beginning of the most recent year, the company's management made the following estimates for the year: Machine-hours Direct labour-hours Direct materials cost Direct labour cost Manufacturing overhead cost Dept 1 Dept 2 80,000 19,000 30,000 60,000 $195,000 $292,000 $260,000 $520,000 $400,000 $700,000 Job 66 entered production on April 1 and was completed on May 12. The company's cost records show the following information about the job: Machine-hours Direct labour-hours Direct materials cost Direct labour cost Dept 1 200 70 $840 $610 Dept 2 60 120 $1,500 $880 At the end of the year, the records of Adams showed the following actual cost and operating data for all jobs workedon during the year: Machine-hours Dept 1 80,000 Direct labour-hours 28,000 Direct materials cost $156,000 Manufacturing overhead cost $385,000 Direct labour cost $260,000 Required: Dept 2 20,000 66,000 $295,000 $785,000 $520,000 a) Compute the predetermined overhead rates for Department #1 and Department #2. (4 marks) b) Compute the Total Cost of Job 66. (8 marks) c) Compute the amount of Underapplied/Overapplied Overhead in each Department at the end of the current year. (4 marks)
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