Question

(Click the icon to view the costs.) Requirements 1. Compute Smith's predetermined manufacturing overhead rate 2. How much manufacturing overhead was allocated to jobs during the year? 3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much? 4. Were the jobs overcosted or undercosted? By how much?

Answer 1

Please find below table useful to compute desired results: -

А B 1 Estimated Manufacturing Overhead Cost 630000 2 Estimated Machine Hours 90000 3 Predetermined Overhead Rate =B1/B2 4 5 Machine Hour Used 56500 6 Manufacturing Overhead Allocated =B5* B3 7 8 Depreciation on plant 480000 9 Property taxes on Plant 19500 10 Plant Janitors' Wages 8500 11 Manufacturing Overhead Incurred =SUM(B8:B10) 12 Manufacturing overhead Underallocated =B11-B6 14 Job Under Costed =B12

End results would be as follows: -

630,000 90,000 A 1 Estimated Manufacturing Overhead Cost 2 Estimated Machine Hours 3 Predetermined Overhead Rate 4 5 Machine Hour Used 6 Manufacturing Overhead Allocated 56,500 395,500 8 Depreciation on plant 9 Property taxes on Plant 10 Plant Janitors' Wages 11 Manufacturing Overhead Incurred 12 Manufacturing overhead Underallocated 13 14 Job Under Costed 480,000 19,500 8,500 508,000 112,500 112,500