WoodGrain Technology makes home office furniture from fine hardwoods. The compan

Question

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

      

Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.)

2. Compute the total overhead cost applied to Job 127. (Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.)

3-a. What would be the total cost recorded for Job 127? (Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.)

3-b. If the job contained 25 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.)

4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round predetermined overhead rate to 2 decimal places.)

      

What was the amount of underapplied or overapplied overhead in each department at the end of the year?

Department Preparation Fabrication Machine-hours 83,000 37,000 Direct labor-hours 30,500 52,300 Direct materials cost $ 191,000 $ 201,000 Direct labor cost $ 275,000 $ 519,000 Fixed manufacturing overhead cost $ 240,700 $ 491,620 Variable manufacturing overhead per machine-hour $ 2.40 - Variable manufacturing overhead per direct labor-hour - $ 4.40

Explanation / Answer

1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.)

2) Total overhead cost applied = (5.30*350+13.80*135) = $3718

3a) What would be the total cost recorded for Job 127?(Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.)

3-b. If the job contained 25 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.)

Unit product cost = 7536/25 = $301.44

the amount of underapplied or overapplied overhead in each department at the end of the year

Preparation department = (82600*5.30)-448780 = 11000 Under applied

Fabrication department = (52000*13.80)-681300 = 36300 over applied

Predetermined Overhead Rate Preparation department (240700/83000+2.40) = 5.30 per MH Fabrication department (491620/52300+4.40) = 13.80 per DLH

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