Question

Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $180,420. Estimated direct labor cost was $469,480 for 19,400 hours. Actual costs for the most recent month are summarized here: Item Description Direct labor (1,940 hours) Indirect costs Total Cost $46,949 Indirect labor Indirect materials Factory rent Factory supervision Factory depreciation Factory janitorial work Factory insurance General and administrative salaries Selling expenses 2,450 3,430 4,790 5,700 1,240 1,820 4,130 5,370 Required 1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.) ined Overhead Rate Per DL Hour 2. Calculate the amount of applied manufacturing overhead. 3. Calculate actual manufacturing overhead costs. Overhead Costs

Answer 1

1	Predetermined overhead rate	=	Estimated Manufacturing cost/Direct labour hours
		=	$180,420/19,400 hours
		=	9.30	Per DL hours
2	Applied manufacturing overhead	=	Predetermined overhead rate * Actual Direct Labour hours
		=	9.30 per DL hours * 1940 hours
		=	$18,042
3	Actual Manufacturing overhead
	Indirect Labour	=	2,450
	Indirect material	=	3,430
	Factory Rent	=	3,310
	Factory Supervision	=	4,790
	Factory Depreciation	=	5,700
	Factory Janital work	=	1,240
	Factory Insuracne	=	1,820
	Actual Manufacturing overhead		$22,740
4	Actual overhead	=	$22,740
	Applied overhead	=	$18,042
	Balance(Underapplied)	=	$4,698