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WoodGrain 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

WoodGrain 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 direct material costs, and the rate in the Fabrication Department is based on direct labour hours. At the beginning of the year, the companys management made the following estimates for the year:

Department

Preparation

Fabrication

Machine-hours

80,000

21,000

Direct labour-hours

35,000

65,000

Direct materials cost

$

190,000

$

400,000

Direct labour cost

$

280,000

$

530,000

Manufacturing overhead cost

$

426,000

$

740,000

Job 127 was started on April 1 and completed on May 12. The companys cost records show the following information concerning the job:

Department

Preparation

Fabrication

Machine-hours

360

80

Direct labour-hours

90

140

Direct materials cost

$

950

$

1,300

Direct labour cost

$

720

$

990

Required:

  1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department.

  1. Compute the total overhead cost applied to Job 127.

  1. What would be the total cost recorded for Job 127?

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