1.
Estimated machine hours =154,000
Estimated total fixed manufacturing overhead = $654,000
Variable manufacturing overhead = $4.90 per machine hour
Predetermined overhead rate = Variable manufacturing overhead per machine hour+ Estimated total fixed manufacturing overhead/Estimated machine hours
= 4.90+ 654,000/154,000
= 4.90+4.25
= $9.15 per machine hour
2.
Machine hours used = 33
Overhead applied = Machine hours used x Predetermined overhead rate
= 33 x 9.15
= $301.95
Total job cost Sheet (Job- 500) | |
Direct materials | 340 |
Direct labor | 240 |
Overhead applied | 301.95 |
Total manufacturing cost | $881.95 |
Total manufacturing cost assigned to Job 500 = $881.95
3-a.
Total machine hours worked = 145,900
Overhead applied = Total machine hours worked x Predetermined overhead rate
= 145,900 x 9.15
= $1,334,985
Actual manufacturing overhead = $1,341,985
Under applied manufacturing overhead = Actual manufacturing overhead - Overhead applied
= 1,341,985-1,334,985
= $7,000
Manufacturing overhead cost | Under applied | by | $7,000 |
3-b.
If under applied manufacturing overhead closed to cost of goods sold net operating income would decrease.
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