Kody Corporation uses a job-order costing system with a plantwide overhead rate
ID: 2424407 • Letter: K
Question
Kody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Compute the predetermined overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
During the year Job 500 was started and completed. The following information was available with respect to this job:
Compute the total manufacturing cost assigned to Job 500. (Round your intermediate calculations and final answer to 2 decimal places.)
During the year the company worked a total of 145,300 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,244,815. What is the amount of underapplied or overapplied overhead for the year? (Round your intermediate calculations to 2 decimal places.)
If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease?
Kody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production 157,000 Fixed manufacturing overhead cost $ 652,000 Variable manufacturing overhead cost per machine-hour $ 4.40 Required: 1.Compute the predetermined overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
2.During the year Job 500 was started and completed. The following information was available with respect to this job:
Direct materials requisitioned $ 390 Direct labor cost $ 240 Machine-hours used 32Compute the total manufacturing cost assigned to Job 500. (Round your intermediate calculations and final answer to 2 decimal places.)
3(a)During the year the company worked a total of 145,300 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,244,815. What is the amount of underapplied or overapplied overhead for the year? (Round your intermediate calculations to 2 decimal places.)
3(b)If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease?
Explanation / Answer
1)
Predetermined overhead cost = estimated manufacturing overhead cost / estimated total hours in allocation base
Predetermined overhead cost = 652000/157000
= 4.15
2) Total manufacturing cost assigned to Job 500 = material cost + labor cost + overhead cost
= $390 + $ 240 + ($4.15*32)
= $670 + $132.80
= $802.80
3) Total manufacturing overhead applied to work in process = 652000
Total manufacturing overhead cost actually incurred = 1244815
Under applied overhead cost = 592815
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