During February , Cardella Manufacturing works on two jobs: A16 and B17. Summary data concerning these jobs are as follows.
Manufacturing Overhead
Cardella Manufacturing uses a predetermined overhead rate with direct labor costs as the activity base. It expects annual overhead costs to be $760,000 and direct labor costs for the year to be $950,000.
Manufacturing Costs Incurred
Purchased $54,000 of raw materials on account.
F actory labor $76,000, plus $4,000 employer payroll taxes.
Manufacturing overhead exclusive of indirect materials and indirect labor $59,800.
Assignment of Costs
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Direct materials:
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Job A16 $27,000, Job B17 $21,000
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Indirect materials:
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$3,000
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Direct labor:
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Job A16 $52,000, Job B17 $26,000
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Indirect labor:
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$2,000
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Job A16 was completed and sold on account for $150,000. Job B17 was only partially completed.
Instructions
(a) Compute the predetermined overhead rate.
(b) Journalize the February transactions in the sequence followed in the chapter.
(c) What was the amount of under- or overapplied manufacturing overhead?