Question

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 $181,090. Estimated direct labor cost was $481,580 for 19,900 hours.Actual costs for the most recent month are summarized here:Item Description Total CostDirect labor (1,800 hours) $46,361Indirect costs Indirect labor 2,540Indirect materials 3,420Factory rent 3,300Factory supervision 4,730Factory depreciation 5,760Factory janitorial work 1,270Factory insurance 1,890General and administrative salaries 4,240Selling expenses 5,350Required1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.)Predetermined Overhead Rate _____ Per DL Hour2. Calculate the amount of applied manufacturing overhead.Applied Overhead Rate _____3. Calculate actual manufacturing overhead costs.Actual Manufacturing Overhead Costs _____4. Compute over- or underapplied overhead.Overhead _____

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Estimated overhead= $181,090

Estimated direct labor houra= 19,900

Actual costs:

Indirect labor= $2,540

Factory rent= $3,300

Factory supervision= $4,730

Factory depreciation= $5,760

Factory janitorial work= $1,270

Factory insurance= $1,890

Actual overhead= $19,490

Actual direct labor hours= 1,800

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= 181,090/19,900= $9.1 per direct labor hour

Now, we can allocate overhead based on actual direct labor hours:

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

Allocated MOH= 9.1*1,800= $16,380

Actual manufacturing overhead costs= $19,490

Finally, we can determine the over/under allocation:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 19,490 - 16,380

Under/over applied overhead= $3,110 underapplied