Question

Agassi 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 D E K Manufacturing overhead $1,260,000 $1,625,000 $960,000 Direct labor costs $1,800,000 $1,375,000 $495,000 Direct labor hours 110,000 125,000 44,000 Machine hours 440,000 550,000 120,000 During January, the job cost sheets showed the following costs and production data. Department D E K Direct materials used $154,000 $138,600 $85,800 Direct labor costs $132,000 $121,000 $41,250 Manufacturing overhead incurred $108,900 $136,400 $86,900 Direct labor hours 8,800 12,100 3,850 Machine hours 37,400 49,500 10,390 Compute the predetermined overhead rate for each department. (Round answers to 2 decimal places, e.g. 12.50 or 12.50%.) Overhead rate Department D % Department E $ per direct labor hour Department K $ per machine hour LINK TO TEXT LINK TO TEXT Compute the total manufacturing costs assigned to jobs in January in each department. Manufacturing Costs Department D $ Department E $ Department K $ LINK TO TEXT LINK TO TEXT Compute the under- or overapplied overhead for each department at January 31. Manufacturing Overhead Department D $ Department E $ Department K $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

1)	Department D = Manufacturing overhead / Direct labor costs
	=$1,260,000 / $1,800,000 = 70%
	Department E= Manufacturing overhead / Direct labor hours
	= $1,625,000 /125,000 =$13
	Department K = Manufacturing overhead / Machine hours
	= $960,000 /120,000 = $8
	___________________________________________________________________________
2	Total manufacturing costs assigned to jobs in January
			D	E	K
	Direct materials used		$ 154,000.00	$ 138,600.00	$    85,800.00
	Direct labor costs		$ 132,000.00	$ 121,000.00	$    41,250.00
	Manufacturing overhead
	Deptt D on % basis [132000*70%]		$    92,400.00
	Deptt E on DL perhour [12100 hrs*13]			$ 157,300.00
	Deptt K on Machine hour [10390 hrs*8]				$    83,120.00
	TOTAL COST		378,400.00	416,900.00	210,170.00
	______________________________________________________________________
3	Total manufacturing costs actually incured in each jobs in January
			D	E	K
	Direct materials used		$ 154,000.00	$ 138,600.00	$    85,800.00
	Direct labor costs		$ 132,000.00	$ 121,000.00	$    41,250.00
	Manufacturing overhead		$ 108,900.00	$ 136,400.00	$    86,900.00
	TOTAL COST ACTUALLY INCURED		$ 394,900.00	$ 396,000.00	$ 213,950.00
	TOTAL COST ACTUALLY INCURED		$ 394,900.00	$ 396,000.00	$ 213,950.00
	LESS: TOTAL ESTIMATED COST		(378,400.00)	(416,900.00)	(210,170.00)
	UNDERAPPLIED/(OVERAPPLIED) OVERHEAD		16,500.00	(20,900.00)	3,780.00
			UNDERAPPLIED	OVERAPPLIED	UNDERAPPLIED