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:

      

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 Preparation Fabrication Machine-hours 81,000 33,000 Direct labor-hours 32,500 56,200 Direct materials cost $ 191,000 $ 201,000 Direct labor cost $ 285,000 $ 514,000 Fixed manufacturing overhead cost $ 202,500 $ 556,380 Variable manufacturing overhead per machine-hour $ 2.40 - Variable manufacturing overhead per direct labor-hour - $ 4.40 Requred 1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.) Preparation department per MH Fabrication department per DLH 2. Compute the total overhead cost applied to Job 127. Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.) 3-a. What would be the total cost recorded for Job 127? (Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.) Total Direct materlale Direct labor ovenead Total cost 3-b. If the job contained 37 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.) per unlt 4. At the end of the year, the records of WbodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round predetermined overhead rate to 2 decimal places.) reparation Fabrication Machine-hours Cirect labor-hourE Direct materlals cost Manufacturng overhead coet 34,000 S 160,100 5 4D5,340 24,800 8,000 5 426,000 5 793,600 What was the amount of underapplied or overapplied overhead in each department at the end of the year? Preparation Department Fabrication Department

Explanation / Answer

Computation of Predetermine Overhead Rate Direct Labour Hour Machine Hour Fixed Manufacturing Overhead Predetermined Overhead Rate Preparation Department 32500 81000 $202,500.00                            1.78 Per MH Fabrication Department 56200 33000 $556,380.00                            6.27 Per DLH Total 88700 114000 $758,880.00 1 Predetermined Overhead Rate Preparation Department $1.78 Per MH Fabrication Department $6.27 Per DLH Total 2. Computation of Total Over head Cost applies to Job 127 Predetermined Overhead Rate Machine Hour /Labour Hour Cost of Overhead Applied Preparation Department $1.78/MH 360 Machine Hour $641.00 Fabrication Department $6.27/DLH 129 Hour $809.00 Total $1,450.00 3(a) Computation of Total Cost for Job 127 Department Preparation Fabrication Total Direct Material $938.00 $1,240.00 $2,178.00 Direct Labour $700.00 $1,010.00 $1,710.00 Manufacturing Overhead $641.00 $809.00 $1,450.00 Total Cost $2,279.00 $3,059.00 $5,338.00 3.b) Per Unit Cost Particular Amount Total Cost for Job 127 $5,338.00 No. of Unit in Job 127 $37.00 Unit Product Cost/Unit $144.27 Computation of Predetermine Overhead Rate Budgeted Fixed Manufacturing Overhead Actual Overhead Preparation Department $202,500.00 $405,340.00 $202,840.00 Under applied Fabrication Department $556,380.00 $793,600.00 $237,220.00 Under applied Total $758,880.00 $1,198,940.00

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