Question

1. A normal job-order costing system is a system that uses:

a. actual costs for direct materials and estimated costs for direct labor and overhead.

b. actual costs for direct materials and direct labor and estimated costs for overhead.

c. actual costs for direct materials and overhead, estimated costs for direct labor.

d. estimated costs for direct materials, direct labor, and overhead.

.

2.  Mitchell's Softball Gloves Company estimated the following at the beginning of the year:

​	Assembly Department	Testing Department	Total
Overhead	$570,000	$130,000	$700,000
Direct Labor Hours	142,500 hrs.	32,500hrs.	175,000hrs.
Machine Hours	32,000hrs.	65,000hrs.	97,000hrs.

​

Mitchell uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead. Machine hours are used to apply overhead in the testing department.

Actual data for August is as follows:

​	Assembly Department	Testing Department	Total
Overhead	$42,000	$12,000	$54,000
Direct Labor Hours	13,500hrs.	2,430hrs.	15,930hrs.
Machine Hours	4,020hrs.	11,000hrs.	15,020hrs.

​

Using departmental overhead rates, which of the following is correct?

a. Applied overhead for both departments combined is $63,720.

b. None of these are correct.

c. Applied overhead for the testing department is $4,860.

d. Applied overhead for the assembly department is $54,000.

e. Overhead for the assembly department is underapplied.

Answer 1

Answer 1

b. actual costs for materials and labor but estimated cost for overhead

Explanation:

Job costing is the cost of individual orders received from customers. In job costing, we take material and labor on actual basis as we know what kind of od work will require wat kind of material and labor. But overheads are applied on a predetermined basis and so they are estimated.

Answer 2

d. The applied overheads for the assembly department are 54000

Caluclations:

	Assembly	Testing
Overheads	$ 570,000	$ 130,000
(/)Basis	142,500	65,000
(=)Overhead rate	$             4	$             2
(*)Actual use	$   13,500	$   11,000
(=)Applied Overheads	$54,000	$22,000

In case of any doubt, please comment.