Calculate predetermined overhead rate for each department

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Question -

Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labour cost in Department D, direct labour hours in Department E, and machine hours in Department K.

In establishing the predetermined overhead rates for 2016, the following estimates were made for the year.

 

Department

 

D

E

K

Manufacturing overhead

$1,240,000

$1,500,000

$720,000

Direct labour costs

$1,550,000

$1,250,000

$450,000

Direct labour hours

100,000

125,000

40,000

Machine hours

400,000

500,000

120,000

During January, the job cost sheets showed the following  costs and production data.

 

Department

 

D

E

K

Direct materials used

$140,000

$126,000

$78,000

Direct labour costs

$120,000

$110,000

$37,500

Manufacturing overhead incurred

$99,000

$124,000

$79,000

Direct labour hours

8,000

11,000

3,500

Machine hours

34,000

45,000

10,390

1. Calculate the predetermined overhead rate for each department.

2. Calculate the total manufacturing costs assigned to jobs in January in each department.

3. Calculate the under- or over-applied overhead for each department at January 31.

Reference no: EM131563733

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