15.00 points Verizox Company uses a job order cost system with manufacturing ove

Question

15.00 points 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 $184,240. Estimated direct labor cost was $458,720 for 18,800 hours. Actual costs for the most recent month are summarized here: Total Cost $45,873 Direct labor (1,880 hours) Indirect costs Indirect labor Indirect materials Factory rent Factory supervision Factory depreciation Factory janitorial work Factory insurance General and administrative salaries Selling expenses 2.470 3,360 3,280 4,710 5,760 1,210 1,730 4,280 5,400 Required: 1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.) ined Overhead Rate Per DL Hour F3 FS F8

Explanation / Answer

Indirect Labor

      Indirect Material

      Factory Rent

      Factory Supervision

      Factory Depreciation

      Factory Janitorial Work

      Factory Insurance

Actual Manufacturing Overhead Costs

Solution: 1. Predetermined overhead rate = $ 9.80 per direct labor hour Working Notes: Predetermined overhead rate = Estimated total manufacturing overhead cost / Total direct labor hours = $184,240 /18,800 =$ 9.80 per direct labor hour 2. Total manufacturing overhead applied = $18,424 Working Notes: Total manufacturing overhead applied = Total direct labor hours applied during the month x Pre determined manufacturing OH rate = 1,880 direct labor hours x $9.80 per direct labor hour = 1,880 x $9.80 = $18,424 3. Actual manufacturing overhead costs = $22,520 Working Notes:

Indirect Labor

2,470

      Indirect Material

3,360

      Factory Rent

3,280

      Factory Supervision

4,710

      Factory Depreciation

$5,760

      Factory Janitorial Work

$1,210

      Factory Insurance

$1,730

Actual Manufacturing Overhead Costs

22,520 4. Overhead Underapplied $4,096 Working Notes: Manufacturing Overhead A/c Actual (from 3.) $22,520 Applied $18,424 (calculation done no. 2.) Balance $4,096 (underapplied) Notes: Since actual manufacturing Overhead cost is higher than applied manufacturing overhead cost hence, it is underapplied by $4,096 Because , we applied at predetermined overhead rate not by actual rate. Please feel free to ask if anything about above solution in comment section of the question.

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