Question

P2-4A Agassi Company uses a job order cost system in each of its three manufacturing Compute predetermned departments. Manufacturing overhead is applied to jobs on the basis of direct labor overhead rates, apply cost in Department D, direct labor hours in Department E, and machine hours in overhead Department K. under- or overapplied overhead In establishing the predetermined overhead rates for 2017, the following estimates were made for the year LO 3, 5), AP Department 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 During January, the job cost sheets showed the following costs and production data. Department Direct materials used Direct labor costs $140,000 $126,000 $78,000 $120,000 $110,000 $37,500 Manufacturing overhead incurred $ 99,000 $124,000 $79,000 Direct labor hours Machine hours 8,000 34,000 11,000 45,000 3,500 10,400 Instructions (a) Compute the predetermined overhead rate for each department. (b) Compute the total manufacturing costs assigned to jobs in January in each depart- (b) s356,000, s (a) 80%, $12, $ 5 $193,500 (c $3,000, $ nts are Analyze man ment. (c) Compute the under- or overapplied overhead for each department at January 31.

Answer 1

1	Predermined overhead rate	Department D	Department E	Department K
	Manufacturing overheads	1200000	1500000	900000
	Direct labor cost	1500000
	Direct labor hours		125000
	Machine hours			120000
	Predermined overhead rate	80%	12	7.5
2	Manufacturing cost assigned	Department D	Department E	Department K
	Direct labor cost	120000
	Direct labor hours		11000
	Machine hours			10400
	Predermined overhead rate	80%	12	7.5
	Manufacturing overheads applied	96000	132000	78000
	Direct material	140000	126000	78000
	Direct labor	120000	110000	37500
	Total manufacturing overheads	356000	368000	193500
3	Mnaufacturing cost incurred	99000	124000	79000
	Manufacturing overheads applied	96000	132000	78000
	Under applied / over applied	3000	-8000	1000