Managerial Accounting: P2-4A Murtos Manufacturing Company uses a job order cost system

Managerial Accounting

Murtos Manufacturing Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.
In establishing the predetermined overhead rates for 2011 the following estimates were made for the year.
Manufacturing overhead 1,050,000 1,500,000 840,000
Direct labor costs 1,500,000 1,250,000 450,000
Direct labor hours 100,000 125,000 40,000
Machine hours 400,000 500,000 120,000

During January, the job cost sheets showed the following costs and production data.
Direct materials used 140,000 126,000 78,000
Direct labor costs 120,000 110,000 37,500
Manufacturing overhead incurred 89,000 124,000 74,000
Direct labor hours 8,000 11,000 3,500
Machine hours 34,000 45,000 10,400

a. Compute the predetermined overhead rate for each department.
Department A overhead is applied on direct labor cost
Department B overhead is applied on direct labor hours
Department C overhead is applied on machine hours
b. Compute the total manufacturing costs assigned to jobs in January in each department.
c. Compute the under- or overapplied overhead for each department at January 31.
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