Question
Kody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the
Kody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production | 155,000 | |
Fixed manufacturing overhead cost | $ | 656,000 |
Variable manufacturing overhead cost per machine-hour | $ | 4.80 |
|
Required:
1. Compute the predetermined overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
2. During the year Job 500 was started and completed. The following information was available with respect to this job:
Direct materials requisitioned | $ | 310 |
Direct labor cost | $ | 260 |
Machine-hours used | 40 | |
|
Compute the total manufacturing cost assigned to Job 500. (Round your intermediate calculations and final answer to 2 decimal places.)
3-a. During the year the company worked a total of 145,700 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,323,171. What is the amount of underapplied or overapplied overhead for the year? (Round your intermediate calculations to 2 decimal places.)
3-b. If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease?
Increase | |
Decrease |
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