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Predetermined Overhead rate

January 14, 2015| Papers Haven

Predetermined Overhead rate

,Total Job Cost, Overhead applied

B3 Company is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 24,000 machine-hours and incur $216,000 in manufacturing overhead cost. During the year, manufacturing overhead was applied to jobs. The actual level of activity for the year was 25,000 machine-hours and actual overhead costs were $227,000.

Required:

a. Compute the predetermined overhead rate.

b. Job 124 utilized $200 of Direct Materials and $500 of Direct Labor while utilizing 100 machine hours to complete the job. What is the total job cost for Job 124?

c. Compute overhead applied for the year.

d. Was the overhead under- or overapplied? By how much? What can be done with the difference? What should be done in this case?

e. Give three examples of types of companies that would use Job Order Costing.

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