Q5 -15 marks
Manny's Manufacturing manufactures specialized goods to customers' specifications and operates a job-order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labour cost.
The following estimates were made at the beginning of the year:
	Department
	Cutting	Machining	Assembly	Total Plant
Direct labour	$ 324,000	$ 216,000	$432,000	$ 972,000
Manufacturing overhead	$ 583,200	$ 864,000	$108,000	$1,555,200
Jobs require varying amounts of work in the three departments. The company is going to bid on a job that is estimated to require manufacturing costs in the three departments as follows:
	Department
	Cutting	Machining	Assembly	Total Plant
Direct material	$ 24,800	$ 2,500	$ 8,800	$ 36,100
Direct labour	$ 14,500	$ 4,900	$ 22,600	$ 42,000
Manufacturing overhead	?	?	?	?
The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs.
Required:
1.Assuming the use of a plantwide overhead rate:
a.Compute the rate for the current year.
b.Determine the amount of manufacturing overhead cost that would be applied to the new bid job.
2.Suppose that instead of using a plantwide overhead rate, the company had uses a separate predetermined overhead rate in each department. Under these conditions:
a.Compute the rate for each department for the current year.
b.Determine the amount of manufacturing overhead cost that would be applied to the new bid job.
3.At the end of the year, the company assembled the followingactualcost data relating to all jobs worked on during the year:
	Department
	Cutting	Machining	Assembly	Total Plant
Direct material	$ 832,000	$ 98,000	$442,000	$1,372,000
Direct labour	$ 352,000	$ 234,000	$365,600	$ 951,600
Manufacturing overhead	$ 616,000	$ 924,900	$ 98,900	$1,639,800
a.Compute the underapplied or overapplied overhead for the year, assuming that a plantwide overhead rate is used.
b.For each department and the plant in total, compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used.