Question
Ceskimen Clothing Company has two departments: cutting and sewing. The company uses job-order costing and computes a pre-determined overhead rate in each department. The cutting
Ceskimen Clothing Company has two departments: cutting and sewing. The company uses job-order costing and computes a pre-determined overhead rate in each department. The cutting department uses direct labor hours as its base to calculate the rate and the sewing department uses machine hours. At the beginning of the year, the company made the following estimates:
| Department | |
| Cutting | Sewing |
Machine Hours | 10,000 | 4,000 |
Direct Labor Hours | 20,000 | 1,000 |
Direct Labor Cost | $300,000 | $20,000 |
Manufacturing Overhead Cost | $400,000 | $100,000 |
Required: a) Compute the predetermined overhead rate for each department. b) The job cost sheet for Job #98, which was started and completed during the year, showed the following:
| Department | |
| Cutting | Sewing |
Materials Requisitioned | $1,000 | $100 |
Machine Hours | 4 | 8 |
Direct Labor Hours | 8 | 2 |
Direct Labor Cost | $120 | $40 |
Calculate the amount of manufacturing overhead cost applied to Job #98.
c) At the end of the year, the records of the company showed the following actual cost and operating data for all jobs worked on during the year:
| Cutting Department | Sewing Department |
Machine-hours | 9,000 | 4,100 |
Direct labour-hours | 18,000 | 1,200 |
Manufacturing overhead cost | $370,000 | $98,000 |
Compute the amount of underapplied or overapplied overhead in each department at the end of the year.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started