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Question 2 George Company manufactures furniture to its customers' specifications and uses job order costing. A pre-determined overhead rate is used in applying manufacturing overheads
Question 2 George Company manufactures furniture to its customers' specifications and uses job order costing. A pre-determined overhead rate is used in applying manufacturing overheads to individual jobs. In Department One, overheads are applied on the basis of machine hours, and in Department Two, on the basis of direct labour hours. 4 At the beginning of the current year, management made the following budget estimates to assist in determining the overhead application rate. Direct labour costs Department Department One Two- $3,000,000 $2,250,000 20,000 15,000 $4,200,000 $3,375,000 12,000 7,500 Manufacturing overheads Machine hours Production of 200 units of custom furniture ordered by New 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 New City Furniture (Job No. 58) Direct materials Direct labour costs Direct labour hours Machine hours $101,000 $165,000 1,100 750 $76,000+ $111,000- 7404 500- Required:- (a) Compute the pre-determined overhead rate for each department. (b) Prepare the job order sheet for Job No. 58 showing the total cost of the furniture produced for New City Furniture and the unit cost
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