Required: Compute the over or under-applied factory overhead for the year 1. Assuming the plant-wide overhead rate is used2. Assuming the departmental overhead rates are used Harold Corp uses the job order costing system. Factory overhead is appliejobs on the basis of direct labor cost. The following estimates are made atProblem 3 Predetermined Factory OverheadapplieFabricating Machining Assembly300,0001,200,000beginning of the year:Total600,0001,050,000900,000270,0001,800,0002,520,000Direct LaborFactory Overhead280 The following are the cost required by each department.allowing are the cost required by each department.Fabricating9,0008,400Machining AssemblyDirect MaterialsDirect LaborFactory OverheadTotal13,80028,5006004,20018,6001,500the end of the year, the following are the actual cost data relating to all jobsprocessed during the year:Fabricating Machining570,000630,0001,080,000Assembly342,000786,000252,000TotalDirect MaterialsDirect Labor48,000324,0001,260,000(60,0001,740,0002,592,000Factory Overheadcompany uses plant-wide overhead rate to apply the factory overhead costto jobs.The

The overhead is applied to the production on the basis of predetermined overhead rate.

jobs on the basis of direct labor cost. The following estimates are made at Harold Corp uses the job order costing system. Factory overhead is applie Problem beginning of the year: Fabricating Machining Assembly 300,000 Total 900,000 600,000 1,050,000 1,800,000 2,520,000 Direct Labor 1,200,000 270,000 Factory Overhead 280

jobs on the basis of direct labor cost. The following estimates are made at Harold Corp uses the job order costing system. Factory overhead is applie Problem beginning of the year: Fabricating Machining Assembly 300,000 Total 900,000 600,000 1,050,000 1,800,000 2,520,000 Direct Labor 1,200,000 270,000 Factory Overhead 280

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Question

Required: Compute the over or under-applied factory overhead for the year

1. Assuming the plant-wide overhead rate is used

2. Assuming the departmental overhead rates are used

Harold Corp uses the job order costing system. Factory overhead is applie
jobs on the basis of direct labor cost. The following estimates are made at
Problem 3 Predetermined Factory Overhead
applie
Fabricating Machining Assembly
300,000
1,200,000
beginning of the year:
Total
600,000
1,050,000
900,000
270,000
1,800,000
2,520,000
Direct Labor
Factory Overhead
280

The following are the cost required by each department.
allowing are the cost required by each department.
Fabricating
9,000
8,400
Machining Assembly
Direct Materials
Direct Labor
Factory Overhead
Total
13,800
28,500
600
4,200
18,600
1,500
the end of the year, the following are the actual cost data relating to all jobs
processed during the year:
Fabricating Machining
570,000
630,000
1,080,000
Assembly
342,000
786,000
252,000
Total
Direct Materials
Direct Labor
48,000
324,000
1,260,000
(60,000
1,740,000
2,592,000
Factory Overhead
company uses plant-wide overhead rate to apply the factory overhead cost
to jobs.
The

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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