Southern Rim Parts estimates its manufacturing overhead to be $454,500 and its d
ID: 2568427 • Letter: S
Question
Southern Rim Parts estimates its manufacturing overhead to be $454,500 and its direct labor costs to be $1,010,000 for year 1. The first three jobs that Southern Rim worked on had actual direct labor costs of $60,000 for Job 301, $85,000 for Job 302, and $150,000 for Job 303. For the year, actual manufacturing overhead was $424,000 and total direct labor cost was $839,000. Manufacturing overhead is applied to jobs on the basis of direct labor costs using predetermined rates.
Required:
a. How much overhead was assigned to each of the three jobs, 301, 302, and 30?
b. What was the over- or underapplied manufacturing overhead for year 1?
Explanation / Answer
Predetermined overhead rate = estimated manufacturing overhead/estimated direct labor cost
= 454500/10100000
= .45 or 45% of direct labor cost
a)
b)Overhead underapplied /(over) = Actual -applied
= 424000- [Actual direct labor cost *rate]
= 424000- [839000*.45]
= 424000- 377550
= $ 46450 underapplied
Job overhead applied 301 60000*.45= 27000 302 85000*.45= 38250 303 150000*.45= 67500Related Questions
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