Multiple Departments; Applying Overhead
Response to the following:
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 is management made the following estimates for the year:
Department Preparation Fabrication
Machine-hours 85,000 35,000
Direct labor-hours 36,500 50,200
Direct materials cost $189,000 $199,000
Direct labor cost $281,000 $513,000
Fixed manufacturing overhead cost $229,500 $456,820
Variable manufacturing overhead per machine-hour $2.60 -
Variable manufacturing overhead per direct labor-hour - $4.60
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 300 75
Direct labor-hours 77 133
Direct materials cost $944 $1,240
Direct labor cost $740 $980
Required:
1. 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.)
Predetermined overhead rate
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, other intermediate calculations and final answers to the nearest dollar amount.)
3-a. What would be the total cost recorded for Job 127? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.)
3-b. If the job contained 32 units, what would be the unit product cost? (Round "Predetermined overhead rate" and final answer to 2 decimal places and other intermediate calculations to the nearest dollar amount.)
4. 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:
Department Preparation Fabrication
Machine-hours 84,500 24,800
Direct labor-hours 27,000 50,000
Direct materials cost $161,100 $424,000
Manufacturing overhead cost $457,950 $647,700
What was the amount of underapplied or overapplied overhead in each department at the end of the year? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount. Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Select "None" for no effect (i.e., zero variance).)