Question
Chase Inc. uses a job order costing system. The estimated manufacturing overhead for the year is $3,500,000. The company has decided to allocate the manufacturing
Chase Inc. uses a job order costing system. The estimated manufacturing overhead for the year is $3,500,000. The company has decided to allocate the manufacturing overhead to products on the basis of direct labour cost. The estimated direct labour costs for the year are $2,000,000.
- What is the pre-determine fixed overhead rate that will be used to apply fixed manufacturing overhead to products?
Job # 123 has accumulated $10,000 of direct materials and $20,000 of direct labour costs. The rate per direct labour hour is $25.
l. How much manufacturing overhead will be applied to Job #123?
m. What is the total manufacturing cost of Job # 123 ?
Job # 124 has accumulated $18,000 of direct materials and $60,000 of direct labour costs. The rate per direct labour hour is $60.
- How much manufacturing overhead will be applied to Job #124?
- What is the total manufacturing cost of Job # 124 ?
Job # 125 has accumulated $12,000 of direct materials and $25,000 of direct labour costs. The rate per direct labour hour is $25.
- How much manufacturing overhead will be applied to Job #125?.
- What is the total manufacturing cost of Job # 125 ?
At the end of the year over 40,000 different jobs were produced. Actual manufacturing overhead costs amounted to $3,200,000 instead of the $3,500,000 estimated at the beginning of the year. The actual direct labour costs amounted to $2,200,000 instead of the $2,000,000 estimated at the beginning of the year.
- How much manufacturing overhead was applied to all of the 40,000 + jobs?
- Was the manufacturing overhead over or under applied?
- By how much was the manufacturing overhead over or under applied?
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