Question

P2.4A (LO 3,5), AP 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 E K Manufacturing overhead Direct labor costs Direct labor hours Machine hours $1,200,000 $1,500,000 100,000 400,000 $1,500,000 $1,250,000 125,000 500,000 $900,000 $450,000 40,000 120,000

Answer 1

Formatting Styles Clipboard Font Table Styles Alignment Alignment Number M20 A B C D E F G H U I L M N o 1 a. Calculation of Predetermined Overhead Rate for each Department: b. Calculation of Total Manufacturing Costs assigned to jobs in January : Dept D = Manufacturing Overhead Direct Labour Cost = $1,200,000 $1,500,000 = $0.8 Per Direct Labour Cost Department Particulars Working IDIEK. Direct Material $ 140,000 $126,000 $ 78,000 Direct Labour Cost $ 120,000 $ 110,000 $ 37,500 Manufacturing Overhead: Dept D $ 120,000 0.8 $ 96,000 Dept E 11,000 * $ 12 $ 132,000 Dept K 10,400 * $ 7.5 $ 78,000 Dept E = Manufacturing Overhead Direct Labour Hours $1,500,000 125,000 = $12 Per Direct Labour Hour TOTAL $ 356,000 $ 368,000 $ 193,500 c. Calculation of Under/Over absorbed overheads : Department Dept E Particulars D K Manufacturing Overhead Machine Hours = $900,000 120,000 = $ 7.5 Per Machine Hour Overheads Incurred $ 99,000 (-) Overheads Absorbed $ 96,000 Under Absorption /(Over Absorption)$ 3,000 $ 124,000 $ 79,000 $ 132,000 $ 78,000 ($ 8,000) $1,000 Sheet1 Sheet2 Ready Num Lock