Question

Patel Foundry in Youngstown, Ohio, uses a predetemmined manufacturing E(Clck the icon to view the costs) overhead rate to allocate ovehead to individual jobs based on the machine hours requred Al the beginning of the year, the company expected to incar the tollowing 1. Compute Patets predetermined manufacturing overhead rate 2. How much manufacturing overhead was allocated to jobs during the year? . How much manufactuing overhead was incunmed during the year?is manufacturing overhead underallocated or overallocated at the end of the year? By how much? 4. Were the jobs overcosted or undercosted? By how much Requirement 1. Compute Pate's predetermined manufacturing overhead rate Determine the formula to calculiate the predetermined overhead rate then caladate the rate Estimated yearly direct iabor cot Estmated yearly dred labor hour Estmated yearly machine hours Estmated yearly overhead costs

Answer 1

1) Predetermine overhead rate =

Estimated manufacturing overhead	/	Estimated machine hour	=	Predetermine overhead rate
600000	/	75000	=	$8 per machine hour

2) Manufacturing overhead allocated = 53500*8 = $428000

3) Actual manufacturing overhead = 495000+18500+9000 = $522500

Under applied overhead by (522500-428000) = $94500

4) Job is under costed by $94500