Question
Problem 2-22A Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Overhead [LO2-1, LO2-7] Luzadis Company makes furniture using the latest automated technology. The company uses
Problem 2-22A Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Overhead [LO2-1, LO2-7]
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: |
Machine-hours | 85,000 | |
Fixed manufacturing overhead cost | $ | 1,279,000 |
Variable manufacturing overhead per computer-hour | $ | 3.40 |
During the year, a glut of furniture on the market resulted in cutting back production and a buildup of furniture in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year: |
Machine-hours | 50,000 | ||
Manufacturing overhead cost | $ | 1,006,000 | |
Required: |
1. | Compute the companys predetermined overhead rate for the year. (Round your answer to 2 decimal places.) |
2. | Compute the underapplied or overapplied overhead for the year. (Round your intermediate calculations to 2 decimal places.) | ||
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