2) dutsero technology, inc. has a job - order costing system. the company uses predetermined overhead rates…

2) dutsero technology, 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 companys management made the following estimates for the year. job 276 entered into production on june 1st and was completed on july 12th. the companys cost records show the following information about the job. at the end of the year, the records of dutsero showed the following actual cost and operating data for all jobs worked on during the year. required: a.) compute the predetermined overhead rates for department a and department b. b.) compute the total overhead cost applied to job 276. c.) compute the amount of underapplied or overapplied overhead in each department at the end of the current year.

2) dutsero technology, 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 companys management made the following estimates for the year. job 276 entered into production on june 1st and was completed on july 12th. the companys cost records show the following information about the job. at the end of the year, the records of dutsero showed the following actual cost and operating data for all jobs worked on during the year. required: a.) compute the predetermined overhead rates for department a and department b. b.) compute the total overhead cost applied to job 276. c.) compute the amount of underapplied or overapplied overhead in each department at the end of the current year.

Answer

Explanation:

Step1: Calculate predeterminded overhead rate for Department A

Predetermined overhead rate in Department A = $\frac{\text{Estimated manufacturing overhead cost}}{\text{Estimated machine - hours}}$ Estimated manufacturing overhead cost for Department A = $$270,000$ Estimated machine - hours for Department A = $30,000$ Predetermined overhead rate for Department A = $\frac{270000}{30000}=$9$ per machine - hour

Step2: Calculate predeterminded overhead rate for Department B

Predetermined overhead rate in Department B = $\frac{\text{Estimated manufacturing overhead cost}}{\text{Estimated direct materials cost}}$ Estimated manufacturing overhead cost for Department B = $$570,000$ Estimated direct materials cost for Department B = $$60,000$ Predetermined overhead rate for Department B = $\frac{570000}{60000}=$9.5$ per dollar of direct materials cost

Step3: Calculate total overhead cost applied to Job 276

Overhead cost applied in Department A for Job 276 = Predetermined overhead rate for Department A $\times$ Machine - hours for Job 276 in Department A Machine - hours for Job 276 in Department A = $450$ Overhead cost applied in Department A for Job 276 = $9\times450=$4050$ Direct materials cost for Job 276 in Department B = $$140$ Overhead cost applied in Department B for Job 276 = Predetermined overhead rate for Department B $\times$ Direct materials cost for Job 276 in Department B Overhead cost applied in Department B for Job 276 = $9.5\times140=$1330$ Total overhead cost applied to Job 276 = $4050 + 1330=$5380$

Step4: Calculate under - applied or over - applied overhead in Department A

Actual manufacturing overhead cost in Department A = $$390,000$ Applied manufacturing overhead cost in Department A = Predetermined overhead rate for Department A $\times$ Actual machine - hours Actual machine - hours in Department A = $75,000$ Applied manufacturing overhead cost in Department A = $9\times75000=$675,000$ Over - applied overhead in Department A = $675000−390000=$285,000$

Step5: Calculate under - applied or over - applied overhead in Department B

Actual manufacturing overhead cost in Department B = $$705,000$ Applied manufacturing overhead cost in Department B = Predetermined overhead rate for Department B $\times$ Actual direct materials cost Actual direct materials cost in Department B = $$290,000$ Applied manufacturing overhead cost in Department B = $9.5\times290000=$2,755,000$ Over - applied overhead in Department B = $2755000 - 705000=$2,050,000$

Answer:

a. Predetermined overhead rate for Department A: $$9$ per machine - hour; Predetermined overhead rate for Department B: $$9.5$ per dollar of direct materials cost b. Total overhead cost applied to Job 276: $$5380$ c. Over - applied overhead in Department A: $$285,000$; Over - applied overhead in Department B: $$2,050,000$