Task: Dotsero Technology, Inc., has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate in Department A is based on machine-hours, and the rate in Department B is based on direct materials cost. At the beginning of the most recent year, the company's management made the following estimates for the year:
|
|
Department A
|
Department B
|
|
Machine-hours...............................
|
70,000
|
19,000
|
|
Direct labor-hours..........................
|
30,000
|
60,000
|
|
Direct materials cost......................
|
$195,000
|
$282,000
|
|
Direct labor cost.............................
|
$260,000
|
$520,000
|
|
Manufacturing overhead cost........
|
$420,000
|
$705,000
|
Job 243 entered into production an April 1 and was completed on May 12. The company’s cost records show the following information about the job:
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|
Department A
|
Department B
|
|
Machine-hours...............................
|
250
|
60
|
|
Direct labor-hours..........................
|
70
|
120
|
|
Direct materials cost......................
|
$840
|
$1,100
|
|
Direct labor cost.............................
|
$610
|
$880
|
At the end of the year, the records of Dotsero showed the following actual cost and operating data for all jobs worked on during the year:
|
|
Department A
|
Department B
|
|
Machine-hours...............................
|
61,000
|
20,000
|
|
Direct labor-hours..........................
|
28,000
|
66,000
|
|
Direct materials cost......................
|
$156,000
|
$284,000
|
|
Manufacturing overhead cost........
|
$385,000
|
$705,000
|
Required:
Part A: Compute the predetermined overhead rates for Department A and Department.
Part B: Compute the total overhead cost applied to Job 243.
Part C: Compute the amount of underapplied or overapplied overhead in each department at the end of the current year.