P4-12 Determining overhead rates, using direct labor cost, direct labor hour, and machine hour methods; determining job cost; computing underapplied and overapplied overhead Lubbock Manufacturing Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, $60,000; esti- mated materials costs, $50,000; estimated direct labor costs, $60,000; estimated direct labor hours, 10,000; estimated ma- chine hours, 20,000; work in process at the beginning of the month, none. The actual factory overhead incurred for the month of Novem- ber was $80,000, and the production statistics on November 30 are as follows: Materials Direct Labor Direct Labor Machine Date Jobs Job Costs Costs Hours Hours Completed 101 $ 5,000 $ 6,000 1,000 3,000 Nov. 10 102 7,000 12,000 2,000 3,200 Nov. 14 .... 103 8,000 13,500 2,500 4,000 Nov. 20 104 9,000 15,600 2,600 3,400 In process .... 105 10,000 29,000 4,500 6,500 Nov. 26 106 11,000 2,400 400 1,500 In process Total $50,000 $78,500 13,000 21,600
P4-12 Determining overhead rates, using direct labor cost, direct labor hour, and machine hour methods; determining job cost; computing underapplied and overapplied overhead Lubbock Manufacturing Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, $60,000; esti- mated materials costs, $50,000; estimated direct labor costs, $60,000; estimated direct labor hours, 10,000; estimated ma- chine hours, 20,000; work in process at the beginning of the month, none. The actual factory overhead incurred for the month of Novem- ber was $80,000, and the production statistics on November 30 are as follows: Materials Direct Labor Direct Labor Machine Date Jobs Job Costs Costs Hours Hours Completed 101 $ 5,000 $ 6,000 1,000 3,000 Nov. 10 102 7,000 12,000 2,000 3,200 Nov. 14 .... 103 8,000 13,500 2,500 4,000 Nov. 20 104 9,000 15,600 2,600 3,400 In process .... 105 10,000 29,000 4,500 6,500 Nov. 26 106 11,000 2,400 400 1,500 In process Total $50,000 $78,500 13,000 21,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required:
1. Compute the predetermined rate, based on the following:
a. Direct labor cost
b. Direct labor hours
c. Machine hours
2. Using each of the methods, compute the estimated total cost
of each job at the end of the month.
3. Determine the under- or overapplied factory overhead, in
total, at the end of the month under each of the methods.
4. Which method would you recommend? Why?
Transcribed Image Text:P4-12
Determining overhead rates, using direct labor cost, direct labor
hour, and machine hour methods; determining job cost;
computing underapplied and overapplied overhead
Lubbock Manufacturing Company is studying the results of
applying factory overhead to production. The following data
have been used: estimated factory overhead, $60,000; esti-
mated materials costs, $50,000; estimated direct labor costs,
$60,000; estimated direct labor hours, 10,000; estimated ma-
chine hours, 20,000; work in process at the beginning of the
month, none.
The actual factory overhead incurred for the month of Novem-
ber was $80,000, and the production statistics on November 30
are as follows:
Materials Direct Labor Direct Labor Machine Date Jobs
Job
Costs
Costs
Hours
Hours
Completed
101
$ 5,000
$ 6,000
1,000
3,000
Nov. 10
102
7,000
12,000
2,000
3,200
Nov. 14
.....
103
8,000
13,500
2,500
4,000
Nov. 20
104
9,000
15,600
2,600
3,400
In process
105.
10,000
29,000
4,500
6,500
Nov. 26
106
11,000
2,400
400
1,500
In process
Total
$50,000
$78,500
13,000
21,600
......
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