Longwood Industries uses a job-order cost system. The company applies manufactur

Question

Longwood Industries uses a job-order cost system.   The company applies manufacturing

            overhead to jobs using a predetermined overhead rate based on direct labor hours.

            The estimated MOH was $136,000 for the year and the estimated direct labor hours

            were 16,000 hours.

In June, Job #325 was completed.   Direct materials totaled $6,000.   Total labor costs were $5,000 at $10 per hour.

At the end of the year, it was determined that the company worked 15,000 direct labor hours for the year, and incurred $139,000 in actual manufacturing overhead costs.

REQUIRED:

a.    Calculate the predetermined overhead rate for the year.

b.    Determine the amount of overhead charged to jobs during the year.

c.    Determine the amount of under- or over-applied overhead for the year.

d.   Prepare a job cost sheet for Job #872 using the information given. Assuming that

      80 units were completed, determine the unit product cost.

Explanation / Answer

a) $136,000/16,000 direct labor hours = $8.50/DL hour

b) For question b you will use your pre determined overhead rate of 8.50 that we calculated for part a. You will take 8.50*15,000 Direct Labor Hours that were actually worked for the year = 127,500.

c) Since this number is less than 136,000 it means we underapplied overhead. To calculate the difference we take 136,000-127,500=8500

d) I only see information about Job #325 so I cannot answer this question!

Hope I helped for a-c!

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