Question

Pharoah Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.

In establishing the predetermined overhead rates for 2020, the following estimates were made for the year. Department Manufacturing overhead Direct labor costs Direct labor hours Machine hours $931,000 $1,330,000 150,000 600,000 $1,625,000 $1,020,000 $1,875,000 $675,000 125,000 60,000 750,000 120,000 During January, the job cost sheets showed the following costs and production data. Department Direct materials used Direct labor costs Manufacturing overhead incurred Direct labor hours Machine hours $210,000 $180,000 $148,500 12,000 51,000 $189,000 $165,000 $186,000 16,500 67,500 $117,000 $56,250 $118,500 5,250 10,340 x Your answer is incorrect. Try again. Compute the predetermined overhead rate for each department. (Round answers to 2 decimal places, e.g. Overhead rate Department D Department E 09 || per direct labor hour Departmer per machine hour x Your answer is incorrect. Try again. Compute the total manufacturing costs assigned to jobs in January in each department. Manufacturing Costs Department D Department E Department K x Your answer is incorrect. Try again. Compute the under or overapplied overhead for each department at January 31. Manufacturing Overhead Department D Department E Department K

Answer 1

(A) Predetermined Overhead Rate for Each Department

Department D:- 931,000/1,330,000= 0.7 per direct labour cost

Department E:- 1,625,000/125,000= 13 per direct labour hour

Department K:- 1,020,000/120,000= 8.5 per machine hour

(B) Total manufacturing cost assigned to each department

Particulars	Department D	Department E	Department K
Direct Material	210,000	189,000	117,000
Direct labour	180,000	165,000	56,250
Manufacturing overhead applied	126,000 (180,000 * 0.7)	214,500 (16,500 *13)	87,890 (10,340 * 8.5)
Total manufacturing cost	516,000	568,500	261,140

(C) Under or over applied overhead for each department

Department	Actual Overhead	Applied Overhead	Difference	Under/ over applied
Department D	148,500	126,000	22,500	Under applied
Department E	186,000	214,500	28,500	Over appiled
Department K	118,500	87,890	30,610	Under applied