PROBLEM 3-26 Multiple Departments; Applying Overhead [LO1, L02, L03, L07] WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead costto jobs. The predetermined overhead rate in the Preparation Department is based on machine- hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company's management made the following estimates for the year: Department Preparation Fabrication Machine-hours . ... 80,000 21,000 Direct labor-hours . . 35,000 50,000 Direct materials cost. . . .. $190,000 $400,000 Direct labor cost . . $280,000 $530,000 Fixed manufacturing overhead cost . . .. $256,000 $520,000 Variable manufacturing overhead per machine-hour . . $2.00 Variable manufacturing overhead per direct labor-hour . . ... $4.00 Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job: Department Preparation Fabrication Machine-hours . . .. 350 70 Direct labor-hours . . 80 130 Direct materials cost . $940 $1,200 Direct labor cost . $710 $980 Required: 1. Compute the predetermined overhead rate used during the year in the Preparation Depart- ment. Compute the rate used in the Fabrication Department. 2. Compute the total overhead cost applied to Job 127. 3. What would be the total cost recorded for Job 127? If the job contained 25 units, what would be the unit product cost? 4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: Department Preparation Fabrication Machine-hours . . 73,000 24,000 Direct labor-hours 30,000 54,000 Direct materials cost . . . . . $165,000 $420,000 Manufacturing overhead cost . . . $390,000 $740,000 What was the amount of underapplied or overapplied overhead in each department at the end of the year?WOODGRAIN TECHNOLOGY Department Preparation Fabrication Estimates, beginning of year: Machine-hours 80,000 21,000 Direct labor-hours 35,000 50,000 Direct materials cost 190,000 400,000 Direct labor cost 280,000 530,000 Fixed manufacturing overhead cost 256,000 $ 520,000 Variable manufacturing overhead per machine-hour 2.00 Variable manufacturing overhead per direct labor-hour $ 4.00 Job 127: Machine-hours 350 70 Direct labor-hours 80 130 Direct materials cost 940 $ 1,200 Direct labor cost 710 $ 980 Actual data for all jobs during year: Machine-hours 73,000 24,000 Direct labor-hours 30,000 54,000 Direct materials cost 165,000 $ 420,000 Manufacturing overhead cost 390,000 $ 740,000WOODGRAIN TECHNOLOGY Computations 1. Preparation Department predetermined overhead rate: Estimated fixed manufacturing overhead Estimated variable manufacturing overhead Estimated total manufacturing overhead cost Estimated total machine-hours MHs Predetermined overhead rate per MH Fabrication Department predetermined overhead rate: Estimated fixed manufacturing overhead Estimated variable manufacturing overhead Estimated total manufacturing overhead cost Estimated total machine-hours DLHS Predetermined overhead rate per DLH 2. Overhead cost applied to Job 127: Preparation Department overhead applied Fabrication Department overhead applied Total overhead cost 3. Total cost of Job 127: Departments Preparation Fabrication Total Direct materials Direct labor Manufacturing overhead Total cost Unit product cost for Job 127: Total manufacturing cost Number of units in the job units Unit product cost per unit 4. Under- or overapplied overhead: Preparation Fabrication Manufacturing overhead cost incurred Manufacturing overhead cost applied Underapplied (or overapplied) overhead