Question
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 machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the companys management made the following estimates for the year:
Department Preparation Fabrication Machine-hours 88,000 36,000
Direct labor-hours 33,000 58,800
Direct materials cost $ 187,000 $ 197,000
Direct labor cost $ 281,000 $ 515,000
Fixed manufacturing overhead cost $ 202,400 $ 540,960
Variable manufacturing overhead per machine-hour $ 2.80 -
Variable manufacturing overhead per direct labor-hour - $ 4.80
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 Fabrication
Machine-hours 390 71
Direct labor-hours 89 126
Direct materials cost $ 932 $ 1,220
Direct labor cost $ 750 $ 980
Requred: 1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.)
2. Compute the total overhead cost applied to Job 127. (Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.) 3-a. What would be the total cost recorded for Job 127? (Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.)
3-b. If the job contained 40 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.)
4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round predetermined overhead rate to 2 decimal places.)
Department Preparation Fabrication
Machine-hours 87,700 24,300
Direct labor-hours 29,000 52,000
Direct materials cost $ 162,100 $ 414,000
Manufacturing overhead cost $ 456,770 $ 690,600
What was the amount of underapplied or overapplied overhead in each department at the end of the year?
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