PROBLEM 17.3A Georgia Woods, Inc., manufactures furniture to customers' specifications and uses job order cost- Job Order Costing: ing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. through A Comprehensive In Department One, overhead is applied on the basis of machine-hours, and in Department Two, on LOS Problem the basis of direct labor hours. At the beginning of the current year, management made the follow- ing budget estimates to assist in determining the overhead application rate: Department Department One Two Direct labor cost . . . $300,000 $225,000 Direct labor hours . . .. . 20,000 15,000 Manufacturing overhead. . $420,000 $337,500 Machine-hours . ..... 12,000 7,500 Production of a batch of custom furniture ordered by City Furniture (job no. 58) was started early in the year and completed three weeks later on January 29. The records for this job show the following cost information: Department Department One Two Job order for City Furniture (job no. 58): Direct materials cost . . ... .... $10,100 $ 7,600 Direct labor cost . . .. $16,500 $11,100 Direct labor hours 1,100 740 84'F Sunny ~Find text or books Q H Q Department Department One Two Job order for City Furniture (job no. 58): Direct materials cost . . .... .. ... . . . .. $10,100 $ 7,600 Direct labor cost . .. . $16,500 $11,100 Direct labor hours . . . . .. 1,100 740 Machine-hours . 750 500 Selected additional information for January is as follows: Department Department One Two Direct labor hours-month of January 1,600 1.200 Machine-hours-month of January . . . . . . . . . 1,100 600 Manufacturing overhead incurred in January. . . . . .. . $39,010 $26,540 Instructions a. Compute the predetermined overhead rate for each department. b. What is the total cost of the furniture produced for City Furniture? c. Prepare the entries required to record the sale (on account) of the furniture to City Furniture. The sales price of the order was $147.000. d. Determine the over- or underapplied overhead for each department at the end of January