Question 2 (7 marks)

a) A company has the following transactions during the week.

Purchase of $1,000 raw materials inventory

Assignment of $500 of raw materials inventory to Job 5

Payroll for 20 hours with $1,000 assigned to Job 5

Factory utility bills of $750

Overhead applied at the rate of $10 per hour

Required: What is the cost assigned to Job 5 at the end of the week? (2 marks)

b) When setting its predetermined overhead application rate, Tasty Turtle estimated its overhead would be $75,000 and manufacturing would require 25,000 machine hours in the next year. At the end of the year, it found that actual overhead was $74,000 and manufacturing required 24,000 machine hours.

Required:

i) Determine the predetermined overhead rate. (1.5 marks)

ii) What is the overhead applied during the year? (1.5 marks)

iii) Determine the under- or overapplied overhead. (2 marks)

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