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26 June, 08:31

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

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  1. 26 June, 09:08
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    Instructions are below.

    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
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