Verizox Company uses a job order cost system with manufacturing overhead applied
ID: 1148059 • Letter: V
Question
Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $186,850. Estimated direct labor cost was $442,150 for 18,500 hours Actual costs for the most recent month are summarized here Item Description Direct labor (1,850 hours) Indirect costs Total Cost $44,216 Indirect labor Indirect materials Factory rent Factory supervision Factory depreciation Factory janitorial work Factory insurance General and administrative salaries Selling expenses 2,530 3,420 3,400 4,790 5,750 1,270 1,820 4,260 5,490 Required 1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.) Predetermined Overhead Rate Per DL Hour 2. Calculate the amount of applied manufacturing overhead lied Manufacturing Overhead 3. Calculate actual manufacturing overhead costs tual Manufacturing Overhead Costs 4. Compute over- or underapplied overhead. (Input the amount as positive value.) OverheadExplanation / Answer
1,
Determine the company's predetermined overhead rate as follows:
Predetermined overhead rate = Estimated manufacturing overhead / Number of Hours.
Estimated manufacturing overhead = $186,850
Estimated number of hours = 18,500 hours
= $186,850 / 18,500hours
Predetermined overhead rate = 10.1
Therefore Pre-determined overhead rate is 10.1
2.
Calculate the amount of applied manufacturing head as follows:
Applied manufacturing overhead = (Predetermined manufacturing overhead per direct labor hour * Direct labor hour worked).
= 10.1 * 1850
= 18,685
Therefore applied manufacturing overhead is 18,685.
3.
Calculate over or under applied overhead as follows:
Therefore, actual manufacturing overhead costs are 22,980.
4.
Compute over or under applied overhead as follows:
Actual manufacturing overhead = 22,980
Applied manufacturing overhead = 18,685
Actual manufacturing overhead > Applied manufacturing overhead
Overhead are underapplied by = 22,980 - 18,685
=4,295
Therefore overhead is underapplied by 4,295
Particulars Amount($) Indirect Labor 2,530 Indirect materials 3,420 Factory Rent 3,400 Factory supervision 4,790 Factory depreciation 5,750 Factory Janitorial work 1,270 Factory Insurence 1,820 Actual manufacturing overhead costs 22,980Related Questions
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