Verizox Company uses a job order cost system with manufacturing overhead applied

Question

Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $300,000. Estimated direct labor cost was $400,000 for 20,000 hours.

Calculate the predetermined overhead rate.

Calculate the amount of applied manufacturing overhead.

Calculate actual manufacturing overhead costs.

Compute over- or underapplied overhead. (Input the amount as positive value.)

Explanation / Answer

1. The predetermined overhead rate for the year is $ 300,000 / 20,000 hours = $ 15 per hour 2. The amount of applied manufacturing overhead will be 1,500 hours X $ 15 per hour = $ 22,500 3. Actual Manufacturing Overhead Costs       Factory rent     4,200.00       Factory supervision     4,700.00       Factory depreciation     5,600.00       Factory janitorial work     1,200.00       Factory insurance     2,600.00 18,300.00 4. Under-applied Overheads are $ 22,500 - $ 18,300 = $ 4,200.

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