Openshaw Manufacturing Company made the following estimates at the beginning of the year: Direct labor costs. Manufacturing overhead. Machine hours.. Direct labor hours... Department G Department H $219,000 $166,980 $86,700 $153,340 17,000 30,000 12,500 22,000 Manufacturing overhead is applied on the basis of machine hours in Department G, and on the basis of direct labor hours in Department H. During the year, the fol- lowing two jobs were completed: Direct materials used Direct labor costs Direct labor hours. Machine hours Job #29 Department G Department H $16,000 $9.200 $18,250 2,500 1,410 Job #30 $14,420 1,900 1.080 Direct materials used Direct labor costs Direct labor hours. Machine hours.. Department G $17,500 $19,710 Department H $8,100 $13,920 2,700 1,800 1,530 1,020 1. Compute the predetermined overhead rate for each department.
2. Determine the amount of manufacturing overhead to be applied to each job.
3. Determine the total cost of each job.
4. Given that the actual manufacturing overhead costs for the year in Department $\mathrm{G}$ and $\mathrm{H}$ were $\$ 88,200$ and $\$ 152,500$, respectively; that the actual machine hours in Department G were 18,100; and that the direct labor hours in Department $H$ were 21,600 ; compute the amount of over- or underapplied manufacturing overhead.
5. Interpretive Question: Why is the predetermined overhead rate based on estimated rather than actual information?