Response to the following problem:
Kody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production 150,000
Fixed manufacturing overhead cost $750,000
Variable manufacturing overhead cost per machine-hour $4.00
Required:
1. Compute the predetermined overhead rate.
2. During the year Job 500 was started and completed. The following information was available with respect to this job: Direct materials requisitioned $350 . Direct labor cost $230, Machine-hours used 30. Compute the total manufacturing cost assigned to Job 500.
3-a: During the year the company worked a total of 147,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,325,000. What is the amount of underapplied or overapplied overhead for the year?
3-b: If this amount were closed out entirely to cost of goods sold, would the journal entry increase or decrease net operating income? a) Increase b) Decrease