Compute the predetermined oh rates used in fabrication

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(Departmental rates) All jobs at Frankfurt Inc., which uses a job order costing system, go through two departments (Fabrication and Assembly). Overhead is applied to jobs based on machine hours in Fabrication and on labor hours in Assembly. In December 2009, corporate management estimated the following production data for 2010 in setting its predetermined OH rates:


Fabrication

Assembly

Machine hours

104,000

44,000

Direct labor hours

50,400

320,000

Departmental overhead

$1,560,000

$1,760,000

Two jobs completed during 2010 were #2296 and #2297. The job order cost sheets showed the following information about these jobs:


Job #2296

Job #2297

Direct material cost

$118,500

$147,200

Direct labor hours-Fabrication

900

460

Machine hours-Fabrication

1,800

900

Direct labor hours-Assembly

850

400

Machine hours-Assembly

108

46

Direct labor workers are paid $12 per hour in the Fabrication Department and $10 per hour in the Assembly Department.

a. Compute the predetermined OH rates used in Fabrication and Assembly for 2010.

b. Compute the direct labor cost associated with each job for both departments.

c. Compute the amount of overhead assigned to each job in each department.

d. Determine the total cost of Jobs #2296 and #2297.

e. Actual data for 2010 for each department are as follows:


Fabricating

Assembly

Machine hours

103,200

43,200

Direct labor hours

47,800

324,000

Departmental overhead

$1,528,000

$1,790,000

What is the amount of underapplied or overapplied overhead for each department for the year ended December 31, 2010?

Reference no: EM131126659

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