Altuve Corporation makes use of a job-order costing system. Altuve applies labor

Question

Altuve Corporation makes use of a job-order costing system. Altuve applies labor-hours were estimated at $84,000 and 24,000 hours, respectively, for the yea anufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year manufacturing overhead and direct g overhead costs. on the job totaled $5,000 and labor costs totaled $2,400 at $6.00 per hour. At the end rect labor-hours for the year and incurred $102,600 in actual manufacturin of the year, it was determined that the company worked 32,300 d Required a. Job #461 contained 100 units. Determi i ne the unit product cost that would appear on the job cost sheet b. Determine the underapplied or overapplied overhead for the year.

Explanation / Answer

a.

Direct Materials $ 5,000

Labor Costs $ 2,400

Manufacturing Overhead $ 1,400

Total $ 8,800

Unit Product Cost = $ 8,800 / 100 units = $ 88

Manufacturing Overhead:

$ 2,400 / $ 6 = 400 DLH's

$ 84,000 / 24,000 hours = $ 3.5 / DLH

Total = 400 DLH's x $ 3.5/DLH = $ 1,400

b.

Actual manufacturing overhead costs = $ 102,600

Overhead applied = 32,300 DLH's x $ 3.5/DLH = $ 113,050

Overhead Overapplied for the year = ($ 10,450)

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