Activity 2 Mr. J. G. Pigg, III is the sole owner of a brick company that manufactures custom bricks used in upscale homes. No two customers have the same type of bricks. The bricks go through three processes: mixing, shaping, and firing. The company uses a job order cost system and computes a predetermined overhead rate in each department. The mixing department bases its rate on direct materials, the shaping department bases its rate on machine hours, and the firing department bases its rate on direct labor hours. At the beginning of the year, the company made the following estimates: Mixing 80,000 30,000 $300,000 $150,000 Department Shaping 45,000 70,000 $. 40 000 $140,000 Firing 60,000 21,000 $15,000 $75,000 Direct labor hours Machine hours Direct materials Manufacturing overhead a. Compute the predetermined overhead rate to be used in each department during the upcoming year. b. Assume the overhead rates that you computed in a. above are in effect. Compute the total overhead cost to be assigned to Dr. Snout's order-Job #5417, assuming the following data: Mixing 300 80 Department Shaping 80 120 Firing 92 120 $300 Direct labor hours Machine hours Direct materials $6,000 $120 c. If actual overhead incurred totaled $3,500, compute the amount of over- or underapplied manufacturing overhead.
Activity 2 Mr. J. G. Pigg, III is the sole owner of a brick company that manufactures custom bricks used in upscale homes. No two customers have the same type of bricks. The bricks go through three processes: mixing, shaping, and firing. The company uses a job order cost system and computes a predetermined overhead rate in each department. The mixing department bases its rate on direct materials, the shaping department bases its rate on machine hours, and the firing department bases its rate on direct labor hours. At the beginning of the year, the company made the following estimates: Mixing 80,000 30,000 $300,000 $150,000 Department Shaping 45,000 70,000 $. 40 000 $140,000 Firing 60,000 21,000 $15,000 $75,000 Direct labor hours Machine hours Direct materials Manufacturing overhead a. Compute the predetermined overhead rate to be used in each department during the upcoming year. b. Assume the overhead rates that you computed in a. above are in effect. Compute the total overhead cost to be assigned to Dr. Snout's order-Job #5417, assuming the following data: Mixing 300 80 Department Shaping 80 120 Firing 92 120 $300 Direct labor hours Machine hours Direct materials $6,000 $120 c. If actual overhead incurred totaled $3,500, compute the amount of over- or underapplied manufacturing overhead.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help me with Activity 2.
Transcribed Image Text:Compute the amount of under- or overapplied overhead in each department at the end of the
year and indicate whether it is under- or overapplied
1 |Page
Activity 2
Mr. J. G. Pigg, III is the sole owner of a brick company that manufactures custom bricks used in
upscale homes. No two customers have the same type of bricks. The bricks go through three
processes: mixing, shaping, and firing. The company uses a job order cost system and computes
a predetermined overhead rate in each department. The mixing department bases its rate on
direct materials, the shaping department bases its rate on machine hours, and the firing
department bases its rate on direct labor hours. At the beginning of the year, the company made
the following estimates:
Mixing
80,000
30,000
$300,000
$150,000
Department
Shaping
45,000
70,000
$.40.000
$140,000
Firing
60,000
21,000
$15,000
$75,000
Direct labor hours
Machine hours
Direct materials
Manufacturing overhead
a. Compute the predetermined overhead rate to be used in each department during the
upcoming year.
b. Assume the overhead rates that you computed in a. above are in effect. Compute the total
overhead cost to be assigned to Dr. Snout's order-Job #5417, assuming the following data:
Mixing
300
80
Department
Shaping
80
120
Firing
92
120
Direct labor hours
Machine hours
Direct materials
$6,000
$120
$300
C. If actual overhead incurred totaled $3,500, compute the amount of over- or underapplied
manufacturing overhead.
2 |Page
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