The overhead costs the Loria Industries, Inc., used to compute its overhead rate for the current year is as follows:

Indirect Labor	$158,200
Repairs and Maintenance, Factory Machines	29,800
Factory Supervision	85,800
Depreciation, factory machinery	170,000
Factory Property Taxes	13,000
Factory Utilities	15,400
Outside service contracts	34,600
Indirect Materials and Supplies	158,400
Factory Insurance	16,400
Miscellaneous overhead	11,520
Total Estimated Manufacturing Overhead Costs	$693,120

The allocation base (cost driver) for the current year is estimated at 91,200 total machine hours.

Before the year begins, the company estimates the current years overhead rate:

1. Compute the current years overhead rate. Round to three decimal places. Make sure to label your rate. FYIthis would be considered the traditional method, just one single predetermined rate.

During the year, the company works on production jobs:

2. Assume that the machine hours used for the current year actual used in production of various jobs totaled 90,500 machine hours. How much overhead would have been applied(allocated) in total to jobs in the current year?
3. One production job, JOB 100 was completed in March of the current year. This job used $100,000 in direct materials, $10,000 in direct labor and 3,000 machine hours, How much overhead would have been applied(allocated) to that job? What is the total cost of the job? Assume the customer paid $160,000 for that job. What is the gross profit on that job?

Now the year is over:

4. Assume the actual overhead incurred was $700,000. Is overhead over or under applied? By how much?
5. What do we need to do with the answer we came up with in previous question?
6. Was JOB 100 over or under costed? Do we need to adjust the cost of that job?