Question
E3-25A Analyze manufacturing overhead (Learning Objectives 3 & 5) Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to
E3-25A Analyze manufacturing overhead (Learning Objectives 3 & 5) Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs pased on the machine hours required. At the beginning of the year, the company expected to incur the following: Manufacturing overhead costs Direct labor cost Machine hours $630,000 $1,650,000 90,000 At the end of the year, the company had actually incurred the following: Direct labor cost Depreciation on manufacturing plant and equipment Property taxes on plant Sales salaries Delivery drivers' wages Plant janitors' wages Machine hours $1,230,000 $480,000 $ 19,500 $26,500 $ 17,000 $8,500 56,500 hours Requirements 1. Compute Smith's predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to jobs during the year? 3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much? 4. Were the jobs overcosted or undercosted? By how much?
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