WoodGrain Technology makes home office furniture from fine hardwoods. The compan

Question

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

Department

    Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

Department

Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round your answers to 2 decimal places.)

If the job contained 25 units, what would be the unit product cost? (Round your intermediate calculations and final answer to 2 decimal places.)

At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round your intermediate calculations to 2 decimal places.)

Department

What was the amount of underapplied or overapplied overhead in each department at the end of the year?

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

Explanation / Answer

Answer 1. Predeterrmined Overhead Rate = Estimated Manufacturing Overhead / Estimated total Units in Allocation Base Predeterrmined Overhead Rate Preparation Deptt. = $256000 (Fixed MOH) / 80000 hr (Machine Hrs) + $2 (Variable MOH) = $5.20 per Machine Hr. Fabrication Deptt. = $520000 (Fixed MOH) / 50000 hr (Labor Hrs) + $4 (Variable MOH) = $14.40 per Labor Hr. Answer 2. Total Overhead Cost Applied to Job 127 Preparation Deptt - $5.20 X 350 Hrs (Mach Hrs)                    1,820 Fabrication Dep - $14.40 X 130 Hrs (Lab. Hrs)                    1,872 Total overhead Applied                    3,692 Answer 3. a. Calculation for Total Cost For Job 127 Preparation Fabrication Total Direct Material 940 1200 2140 Direct Labor 710 980 1690 MOH Applied 1820 1872 3692 Total Cost 3470 4052 7522 Answer 3. b. Cost Per Unit = $7522 (total Cost) / 25 Units = #300.88 per unit Answer 4. Calculation of Underapplied or Overapplied Overhead Preparation Actual manufacturing Ovehead 390000 Applied Ovehead $5.20 X 73000 Hrs (Mach Hrs) 379600 Underapplied Overhead 10400 Fabrication Applied Ovehead $14.40 X 54000 Hrs (Lab. Hrs) 777600 Actual manufacturing Ovehead 740000 Overapplied Overhead 37600

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