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Problem 3-56 Overhead Application Using a Predetermined Overhead Rate (LO 3-2, 3-4, 3-5, 3-6)

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[The following information applies to the questions displayed below.] Tiana Shar, the controller for Bondi Furniture Company, is in the process of analyzing the overhead costs for the month of November. She has gathered the following data for the month.

Labor
Direct-labor hours:
Job 77		3,500
Job 78		3,000
Job 79		2,000
Labor costs:
Direct-labor wages	$	212,500
Indirect-labor wages		17,000
Supervisory salaries		6,000
Material
Inventories, November 1:
Raw material and supplies	$	11,000
Work in process (job 77)		54,000
Finished goods		112,500
Purchases of raw material and supplies:
Raw material	$	134,000
Supplies (indirect material)		16,000
Direct material and supplies requisitioned for production:
Job 77	$	45,000
Job 78		37,500
Job 79		25,500
Supplies (indirect material)		12,500
Total	$	120,500
Other
Building occupancy costs (heat, light, depreciation, etc.)
Factory facilities	$	6,600
Sales offices		1,600
Administrative offices		1,000
Total	$	9,200
Production equipment costs:
Power	$	4,100
Repairs and maintenance		1,500
Depreciation		1,500
Other		1,000
Total	$	8,100

The firms job-order costing system uses direct-labor hours (measured at practical capacity) as the cost driver for overhead application. In December of the preceding year, Shar had prepared the following budget for direct-labor and manufacturing-overhead costs for the current year. The plant is theoretically capable of operating at 150,000 direct-labor hours per year. However, Shar estimates that the practical capacity is 120,000 hours in a typical year.

	Manufacturing Overhead
Direct-Labor Hours	Variable			Fixed
100,000	$	325,000		$	216,000
120,000		390,000			216,000
140,000		456,000			216,000

During November the following jobs were completed:

Job 77	Side chairs
Job 78	End tables

Assist Shar by making the following calculations.

1. Calculate the predetermined overhead rate for the current year. (Round your answer to 2 decimal places.)

2. Calculate the total cost of Job 77. (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)

3. Compute the amount of manufacturing overhead applied to job 79 during November. (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)

4. What was the total amount of manufacturing overhead applied during November? (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)

5. Compute the actual manufacturing overhead incurred during November.

6. Calculate the overapplied or underapplied overhead for November. (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)