Granite Company uses a job order cost 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 $300,000 and 15,000 respectively, for the year. At the end of the year, it was determined that the company actually worked 14,500 direct labor hours for the year, and incurred $286,500 in actual manufacturing overhead costs. Required: a) Determine the predetermined overhead rate for the year. b) Determine the amount of overhead applied to all jobs during the year. c) Determine the amount of under- or over-applied overhead for the year and label the amount as under- or over-applied.
Granite Company uses a job order cost 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 $300,000 and 15,000 respectively, for the year. At the end of the year, it was determined that the company actually worked 14,500 direct labor hours for the year, and incurred $286,500 in actual manufacturing overhead costs. Required: a) Determine the predetermined overhead rate for the year. b) Determine the amount of overhead applied to all jobs during the year. c) Determine the amount of under- or over-applied overhead for the year and label the amount as under- or over-applied.
Chapter1: Financial Statements And Business Decisions
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Granite Company uses a job order cost 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 $300,000 and 15,000 respectively, for the year.
At the end of the year, it was determined that the company actually worked 14,500 direct labor
hours for the year, and incurred $286,500 in actual manufacturing overhead costs.
Required:
a) Determine the predetermined overhead rate for the year.
b) Determine the amount of overhead applied to all jobs during the year.
c) Determine the amount of under- or over-applied overhead for the year and label the amount as
under- or over-applied.
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