Question 8:

a) King Ltd uses a job costing system. The companys budget for the year included a budgeted total manufacturing overhead cost of $1,800,000 and budgeted total direct labour hours of 60,000 hours. Manufacturing overhead cost is applied to jobs based on direct labour-hours worked. During December, King Ltd started and completed one manufacturing job (Job 571). The events of December are:

Direct material cost: Job 571	$215,000
Indirect material cost for December	$55,000
Other manufacturing overhead cost incurred in December	$45,000
Direct labour cost (4,800 hours, including 100 hours idle time)	$120,000
Indirect labour cost for December (excluding idle time)	$40,000

Tasks

1. Calculate the total cost of Job 571.

2. Determine the amount by which the manufacturing overhead cost is overapplied or underapplied for December.