Question

Koebel Corp. uses a job order costing system with manufacturing overhead applied to products on the basis of direct labor hours. For the upcoming year, Koebel Corp estimated total manufacturing overhead cost at $777,000 and total direct labor hours of 51,800. Koebel Corp. started the year with no beginning balances in either Work in Process Inventory or Finished Goods Inventory. During the year actual manufacturing overhead incurred was $747,400 and 48,200 direct labor hours were used. (a) Calculate the predetermined overhead rate. Predetermined Overhead Rate per hour (b) Calculate how much manufacturing overhead will be applied to production. Manufacturing Overhead Applied (c) Is overhead over- or underapplied? By how much? (Input the amount as positive value.) Overhead

Answer 1

	Answer 1
	Estimated manufacturing overhead cost	$      770,000
Divided by:	Estimated direct labour hours	51,800
Answer 1	Predetermined overhead rate per direct labor hour	$           14.86
	Predetermined overhead rate per direct labor hour	$           14.86
Multiply:	Actual direct labour hours	48,200
Answer 2	Applied manufacture overhead	$      716,252
	Actual manufacture overhead	$      747,400
Less:	Applied manufacture overhead	$      716,252
	Under (over) applied overhead	$        31,148
Answer 3	Under applied overhead	$        31,148
	Cost of goods sold account should be adjusted for under applied overhead and balance of cost of goods sold account would be increased.
Answer 4	Cost of goods sold account should be adjusted	Increased