Tiana Shar, the controller for Caesar Glassware Company, is in the process of analyzing the overhead costs for the month of November. She has gathered the following data for the month.

Labor

Direct-labor hours:

Job 57............................................................................. 7,000

Job 58............................................................................. 6,000

Job 59............................................................................. 4,000

Labor costs:

Direct-labor wages.......................................................... $408,000

Indirect-labor wages....................................................... 30,000

Supervisory salaries......................................................... 12,000

Material

Inventories, November 1:

Raw material and supplies................................................ $ 21,000

Work in process (Job 57).................................................. 108,000

Finished goods.................................................................. 125,000

Purchases of raw material and supplies:

Raw material..................................................................... $270,000

Supplies (indirect material)................................................ 30,000

Direct material and supplies requisitioned for production:

Job 57................................................................................. $ 90,000

Job 58.................................................................................. 75,000

Job 59................................................................................... 51,000

Supplies (indirect material)................................................. 24,000

Total.................................................................................. $240,000

Other

Building occupancy costs (heat, light, depreciation, etc.)

Factory facilities............................................................... $ 12,800

Sales offices..................................................................... 3,200

Administrative offices...................................................... 2,000

Total............................................................................... $ 18,000

Production equipment costs:

Power............................................................................. $ 8,200

Repairs and maintenance................................................... 3,000

Depreciation........................................................................ 3,000

Other................................................................................... 2,000

Total................................................................................... $ 16,200

The firm’s job-order costing system uses direct-labor hours (measured at practical capacity) as the cost driver for overhead application. In December of the preceding year, Shar had prepared the following budget for direct-labor and manufacturing-overhead costs for the current year. The plant is theoretically capable of operating at 140,000 direct-labor hours per year. However, Shar estimates that the practical capacity is 115,000 hours in a typical year.

During November the following jobs were completed:

Job 57 .............................................. 10 oz. water glasses

Job 58 ................................................ 5 oz. juice glasses

Required

Assist Shar by making the following calculations.

1. Calculate the predetermined overhead rate for the current year.

2. Calculate the total cost of Job 57.

3. Compute the amount of manufacturing overhead applied to Job 59 during November.

4. What was the total amount of manufacturing overhead applied during November?

5. Compute the actual manufacturing overhead incurred during November.

6. Calculate the overapplied or underapplied overhead for November.

Transcribed Image Text:

Manufacturing Overhead Direct-Labor Hours Variable Fixed 100,000 115,000 130,000 $300,000 345,000 390,000 $230,000 230,000