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Wood Grain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing
Wood Grain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine-hours, and the rate in the Fabrication Department is based on direct materials cost. At the beginning of the year, the company's management made the following estimates for the year. Machine-hours Direct labour-hours Direct materials cost Direct labour cost Manufacturing overhead cost Department Preparation Fabrication 80,000 21,000 35,000 65,000 $190,000 $400,000 $280,000 $530,000 $416,000 $720,000 Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job: Department Preparation 350 Fabrication 70 Machine-hours Direct labour-hours Direct materials cost Direct labour cost 80 $ 940 $710 130 $1,200 $ 980
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