Question

Walker Enterprises, Inc., uses a job-order costing system and sets a predetermined overhead rate at the beginning of each year based on estimated manufacturing overhead costs. Each job requires work in both the Assembly and Machining Departments. The predetermined overhead rate is based on direct labor cost in Assembly Department and on machine hours in Machining Department. At the beginning of the year, the company made the following estimates: Assembly Department $120,000 Machining Department $32,000 Direct labor cost Manufacturing overhead costs $150,000 $160,000 Direct labor hours 7,500 2,000 50,000 Machine hours 3,000 During the upcoming year, Rose had the following actual results: Direct labor cost Manufacturing overhead Assembly Department $150,000 . Machining Department $45,000

Answer 1

Answer is given below with working

Answer is $13,5000 Budgeted Overhead rate Manufacturing overhead Direct Labor cost Predetermined overhead rate Assembly $150,000 $120,000 125.00% Manufacturing overhead Machine hours Machine hour rate Machining $160,000 50,000 $3.201 Pre-determined OH rate Direct Labor cost Machine hours Total Overhead absorbed Actual Overhead incurred (Under)/Over absorption Assembly Machining Factory 125% $3.20 $150,000 55,000 $187,500 $176,000 $363,500 AXB $180,000 $170,000 $350,000 $7,500 $6,000 $13,500 Over-absorbed Over-absorbed Over-absorbed