tenance

1, 500

Depreciation

1, 500

Other

1, 000

Total

$

8, 100

Problem solving assignment

Page

2

of

10

The firm's job order costing system uses direct-labour-hours (measured at practical capacity) as

the cost driver for overhead application. In December of the preceding year, Shar had prepared

the following budgeted for direct-labour and manufacturing overhead costs for the current year.

The plant is theoretically capable of operating at 150, 000 direct-labour hours per year. However,

Shar estimates that the practical capacity is 120,000 hours in a typical year.

Manufacturing overhead

Direct-labour hours

Variable

Fixed

100, 000

$ 325, 000

$ 216, 000

120, 000

390, 000

216, 000

140, 000

455, 000

216, 000

During November the following jobs were completed:

Job 77

Side chairs

Job 78

End tables

Required:

Assist Shar by making the following calculations.

1. Calculate the predetermined overhead rate for the current year.

2. Calculate the total cost of job 77.

3. Computer the amount of manufacturing overhead applied to job 79 during November.

4. What was the total amount of manufacturing overhead applied during November?

5. Compute the actual manufacturing overhead incurred during November.

6. Calculate the overapplied or underappied for November.