Question

Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $185,000. Estimated direct labor cost was $460,650 for 18,500 hours.

Actual costs for the most recent month are summarized here:   

Item Description	Total Cost
Direct labor (1,850 hours)	$	46,066
Indirect costs
Indirect labor		2,410
Indirect materials		3,340
Factory rent		3,370
Factory supervision		4,820
Factory depreciation		5,720
Factory janitorial work		1,290
Factory insurance		1,850
General and administrative salaries		4,150
Selling expenses		5,420

Required:
1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.)



2. Calculate the amount of applied manufacturing overhead.



3. Calculate actual manufacturing overhead costs.



4. Compute over- or underapplied overhead. (Input the amount as positive value.)

Answer 1

Answer :-

1. Predetermined Overhead Rate = Estimated Overhead Cost / Estimated Direct Labor Hour

Predetermined Overhead Rate = $185,000 / 18,500

Predetermined Overhead Rate = $10

2. Applied Manufacturing Overhead = $10 * 1850

Applied Manufacturing Overhead = $18,500

3. Actual Manufacturing Overhead Cost = Indirect Labor + Indirect Material + Factory rent + Factory supervision + Factory Depreciation + Factory Janitorial work + Factory Insurance

Actual Manufacturing overhead cost = $2,410 + $3,340 + $3,370 + $4,820 + $5,720 + $1,290 + $1,850

Actual Manufacturing overhead cost = $22,800

4. Over-or underapplied overhead = Actual Manufacturing overhead - Applied Manufacturing overhead

Underapplied Manufacturing Overhead = $22,800 - $18,500

Underapplied Manufacturing Overhead = $4,300

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