Parker Corporation uses a job-order costing system and applies
manufacturing overhead to jobs using a predetermined overhead rate
based on direct labor-hours. Last year manufacturing overhead and
direct labor-hours were estimated at $80,910 and 27,900 hours,
respectively, for the year. In June, Job #461 was completed.
Materials costs on the job totaled $4,400 and labor costs totaled
$1,836 at $5.40 per hour. At the end of the year, it was determined
that the company worked 34,400 direct labor-hours for the year and
incurred $89,760 in actual manufacturing overhead costs.
Required:
a. Job #461 contained 100 units. Determine the unit product cost
that would appear on the job cost sheet.
b. Determine the underapplied or overapplied overhead for the
year.
Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct labor hours = 80910 / 27900 | 2.9 | per direct labor hour |
Required a : | |
Direct labor hours worked on Job #461 = Direct labor cost / Direct labor rate per hour = 1836 / 5.40 | 340 |
Job #461 | |
Direct materials | 4400 |
Direct labor cost | 1836 |
Manufacturing overhead applied ( 340 * 2.9 ) | 986 |
Total product cost | 7222 |
(/) Number of units | 100 |
Unit product cost | 72.22 |
Required b : | |
Total manufacturing overhead applied = Actual direct labor hours worked * Predetermined overhead rate = 34400 * 2.9 | 99760 |
Actual manufacturing overhead incurred | 89760 |
As the overhead applied are more than the actual overhead incurred, the overheads are overapplied | |
Overapplied overhead = Total manufacturing overhead applied - Actual manufacturing overhead incurred = 99760 - 89760 | 10000 |
Parker Corporation uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined...
Parker Corporation uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year manufacturing overhead and direct labor-hours were estimated at $80,910 and 27,900 hours, respectively, for the year. In June, Job #461 was completed. Materials costs on the job totaled $4,400 and labor costs totaled $1,836 at $5.40 per hour. At the end of the year, it was determined that the company worked 34,400 direct labor-hours for the...
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