Question

CarsonWentz Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead and direct labor-hours were estimated at $88,000 and 16,000 hours respectively, for the year. In June, job #315 was completed. Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour. At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead cos

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Estimated manufacturing overhead= $88,000

Estimated direct labor-hours= 16,000

Job 315:

Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour.

At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead costs.

With the information provided, we can calculate the total cost of Job 315 and the amount of under/over allocated overhead.

First, we need to determine the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 88,000/16,000= $5.5 per direct labor hour

Job 315:

Direct labor hours= 2,340/6.5= 360 hours

Total cost= 1,590 + 2,340 + 5.5*360= $5,910

Now, to calculate the over/under allocation, first, we need to allocate overhead for the whole company.

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 5.5*15,300= $84,150

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 86,750 - 84,150= $2,600 underallocated