Question 2.5 James Bond, Inc., has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate in Department A is based on machine hours, and the rate in Department B is based on direct materials cost. At the beginning of the most recent year, the company's management made the following estimates for the year: Department A B Machine-hours 80,000 20,000 Direct labour-hours 30,000 60,000 Direct materials cost $240,250 $300,000 Direct labour cost $270,000 $570,000 Manufacturing overhead cost $420,000 $705,000 Job 007 entered into production on June 1st and was completed on July 12th. The company's cost records show the following information about the job: Department A B Machine-hours 450 75 Direct labour-hours 70 140 Direct materials cost $1,000 $1,100 Direct labour cost $700 $900 At the end of the year, the records of James Bond, Inc. showed the following actual cost and operating data for all jobs worked on during the year: Department A B Machine-hours 75,000 35,000 Direct labour-hours 30,000 70,000 Direct materials cost $160,000 $290,000 Manufacturing overhead cost $390,000 $705,000 Required: Compute the predetermined overhead rates for Department A and Department B Compute the total overhead cost applied to Job 007. Compute the amount of underapplied or overapplied overhead in each department at the end of the current year.
Question 2.5
James Bond, Inc., has a
|
|
Department |
|
|
|
A |
B |
|
Machine-hours |
80,000 |
20,000 |
|
Direct labour-hours |
30,000 |
60,000 |
|
Direct materials cost |
$240,250 |
$300,000 |
|
Direct labour cost |
$270,000 |
$570,000 |
|
Manufacturing overhead cost |
$420,000 |
$705,000 |
Job 007 entered into production on June 1st and was completed on July 12th. The company's cost records show the following information about the job:
|
|
Department |
|
|
|
A |
B |
|
Machine-hours |
450 |
75 |
|
Direct labour-hours |
70 |
140 |
|
Direct materials cost |
$1,000 |
$1,100 |
|
Direct labour cost |
$700 |
$900 |
At the end of the year, the records of James Bond, Inc. showed the following actual cost and operating data for all jobs worked on during the year:
|
|
Department |
|
|
|
A |
B |
|
Machine-hours |
75,000 |
35,000 |
|
Direct labour-hours |
30,000 |
70,000 |
|
Direct materials cost |
$160,000 |
$290,000 |
|
Manufacturing overhead cost |
$390,000 |
$705,000 |
Required:
- Compute the predetermined overhead rates for Department A and Department B
- Compute the total overhead cost applied to Job 007.
- Compute the amount of underapplied or overapplied overhead in each department at the end of the current year.
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