Question

Brooks Foundry in Rochester comma New York​, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the​ year, the company expected to incur the​ following:Manufacturing overhead costs . . . . . . . . $ 840,000

Direct labor costs . . . . . . . . . . . . . . . . . . 1,550,000
Machine hours . . . . . . . . . . . . . . . . . . 70,000 hours
At the end of 2012, the company had actually incurred:
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,160,000
Depreciation on manufacturing property,
plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Property taxes on plant . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Sales salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,500
Delivery drivers’ wages . . . . . . . . . . . . . . . . . . . . . . . . 23,500
Plant janitor’s wages . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,000 hour
Requirements 1. Compute Brooks' predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to jobs during the​ year? 3. How much manufacturing overhead was incurred during the​ year? Is manufacturing overhead underallocated or overallocated at the end of the​ year? By how​ much? 4. Were the jobs overcosted or​ undercosted? By how​ much?

Answer 1

a) $12

b) 804,000 allocate overhead

c) actual overhead 657,000

the overhead was overapplied for 147,000 dollars

d) the job were overcosted as the manufacturing cost face by the firm weren't as high as expected.

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

the expected overhead wil be distribute over the cost driver which, in this case, is machine hours:

840,000 / 70,000 = $12

each machine hours will generate 12 dollar of overhead

b) applied overhead:

67,000 hours x $12 overheead per hour = 804,000

c) actial overhead

Depreciation on manufacturing property,

plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000

Property taxes on plant . . . . . . . . . . . . . . . . . . . . . . . . . 40,000

Plant janitor’s wages . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000

Total ovehead 657,000

We compare with the allcoated

657,000 - 804,00 = -147,000

there is