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Instructions: Assignment 2 contains three cases. Please read each case and answer the questions posed in the Required sections. See the course syllabus for
Instructions: Assignment 2 contains three cases. Please read each case and answer the questions posed in the "Required" sections. See the course syllabus for additional information regarding assignments. Case #1 Clean Living is a manufacturer of commercial air purifiers. The company uses a job-costing system that has two direct cost categories (direct materials and direct labour) and one indirect cost category (manufacturing overhead). Indirect costs are allocated using a predetermined overhead rate based on direct labour hours. For 2020, the company budgeted $13,200,000 for manufacturing overhead and 300,000 hours for direct labour hours. At the end of the year, the company reviewed two jobs that were both started and completed in the year. The following information pertains to those two jobs. Direct materials cost Direct labour cost Direct labour hours Job 124 $150,170 $50,750 970 Job 753 $178,430 $575,800 1,000 At the end of the year, the company's accountant determined that the actual manufacturing overhead cost was $12,500,000 and the actual direct labour hours was 280,000. Required: A) Using Normal Costing, compute the predetermined overhead rate for the year. B) Using Normal Costing, compute the total manufacturing cost of Job 124 and Job 753. C) Compute the overhead applied to ALL jobs in 2020. D) Compute the overhead variance and indicate whether overhead was overapplied or underapplied? E) Why would company's, such as Clean Living, prefer Normal Costing to Actual Costing?
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