Question

Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K. In establishing the predetermined overhead rates for 2020, the following estimates were made for the year. Department D E Manufacturing overhead $1,500,000 $720,000 Direct labor costs $1,250,000 $450,000 $959,000 $1,370,000 100,000 400,000 Direct labor hours 125,000 40,000 Machine hours 500,000 120,000 During January, the job cost sheets showed the following costs and production data. Department D E Direct materials used $140,000 $126,000 $78,000 Direct labor costs $120,000 $110,000 $37,500 Manufacturing overhead incurred $99,000 $124,000 $79,000 Direct labor hours 8,000 11,000 3,500 Machine hours 34,000 45,000 10,410

Answer 1

computing the over head rate...

Department D = Manufacturing overhead / Direct labour costs

= $959,000 / $1,370,000 =70%

Department E = Manufacturing overhead / Direct labour hours

= $1, 500,000 / 125000 = $12

Department K= Manufacturing overhead / Machine hours

= $720,000 / 120,000 = $6

computing total manufacturing costa assigned to jobs in januvary in each department

Department D = ($120,000 * 70%)= 84000

=(84,000 + 120,000+140,000) =$344,000

Department E= (11,000 * $12 )= $1,32,000

= (1,32,000 + 110,000 +126,000)=$368,000

Department K=(10410*$6)=$62460

=(62460+37500+78000)=$177,960

TOTAL MANUFACTURING COSTS ASSIGNED TO JOBS IN JAN MANUFACTURING COSTS DEPARTMENT D $344,000 DEPARTMENTE $368,000 DEPARTMENT K $117,960

TOTAL MANUFACTURING COSTS ASSIGNED TO JOBS IN JAN MANUFACTURING COSTS DEPARTMENT D $344,000 DEPARTMENTE $368,000 DEPARTMENT K $117,960