Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on...

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Ravsten Company uses a job-order costing system.

The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 35,000 machine-hours and incur $183,750 in manufacturing overhead cost. The following transactions occurred during the year:

a. Raw materials requisitioned for use in production, $309,000 (70% direct and 30% indirect).

b. The following costs were incurred for employee services:

Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on the basis of machine-hours. For

business accounting

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Answer 1

Answer #1

Predetermined overhead rate = Estimated manufacturing overhead cost / Estimated machine hours = 183750 / 35000	5.25

Overhead applied = Actual machine hours used * Predetermined overhead rate = 60000 * 5.25	315000

Indirect materials used ( 309000 * 30% )	92700
Indirect labor	38000
Heat, power and water	67000
Factory insurance ( 30000 * 80% )	24000
factory depreciation ( 80000 * 75% )	60000
Actual overhead cost	281700

As the overhead applied are more than the actual overhead cost, the overhead is overapplied.

Overapplied overhead = Overhead applied - Actual overhead cost = 315000 - 281700	33300

Overapplied overhead

33300

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Answer 2

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