Gene Simmons Company uses normal costing in each of its three manufacturing departments. Factory overhead is applied to production on the basis of machine hours in Department A, direct labor cost in Department B, and direct labor hours in Department C. The following annual, budgeted data is available for the year:

first column is dept a then b then c going left to right

Factory Overhead $380,000 $420,000 $510,000

Direct Labor Cost $480,000 $600,000 $600,000

Direct Labor Hours 40,000 18,000 25,000

Machine Hours 95,000 70,000 35,000

The following actual information is available for January of the current year for each department: first column is dept a then b then c going left to right

Direct Materials Used $31,700 $57,600 $44,600

Direct Labor Cost $28,125 $53,000 $50,400

Factory Overhead $35,640 $36,040 $38,220

Direct Labor Hours Used 1,250 2,300 2,100

Machine Hours Used 8,100 1,440 1,280

REQUIRED:

A. Assume that Gene Simmons Company uses actual costing.

1. Compute the actual overhead rate for January for each department. Dept A Dept B Dept C

2. If one of the units produced in Department A used 650 machine hours, how much overhead cost would be applied to that unit?

3. What two disadvantages are associated with actual costing?

Assume that Gene Simmons Company uses normal costing.

1. How does normal costing "solve" the two problems associated with actual costing?

2. Compute the pre-determined annual overhead rate for the current year for each department. Dept A Dept B Dept C

3. Compute the manufacturing overhead applied in January in each department. Dept A Dept B Dept C

4. Compute under- or over-applied overhead at the end of January in each department. Dept A Over or Under (circle one) Dept B Over or Under (circle one) Dept C Over or Under (circle one)

5. On January 31, how will the balances of the Factory Overhead accounts be reported on the financial statements?

6. On December 31 (the end of the year), how will the balances of the Factory Overhead accounts be reported on the financial statements?