Question

6.       Moody Corporation uses a job- order costing system with a plantwide overhead rate based on...

6.       Moody Corporation uses a job- order costing system with a plantwide overhead rate based on machine- hours. At the beginning of the year, the company made the following estimates:

Machine- hours required to support estimated production . . . . . . 100,000

Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . $ 650,000

Variable manufacturing overhead cost per machine- hour . . . . . $ 3.00

Required:

1.    Compute the predetermined overhead rate.

2.       During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials requisitioned . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 450

Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 210

Machine- hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      . . 40

Compute the total manufacturing cost assigned to Job 400.

3.   During the year, the company worked a total of 146,000 machine- hours on all jobs and incurred actual manufacturing overhead costs of $ 1,350,000. What is the amount of underap-plied or overapplied overhead for the year? If this amount were closed out entirely to Cost of Goods Sold would the journal entry increase or decrease net operating income?

Homework Answers

Answer #1

1.Predetermined overhead rate= Total fixed cost/Machine hours=$650000/100000=$6.50/hr

2.Total manufacturing cost of the job

Direct Material=$450

Direct Labour=$210

Variable mfr overhead=$3×40=$120

Allocated fixed Mfr overhead=$6.5×40=$260

Total cost=$1040

3.Estimated overhead=$650000

Actually incurred=$1350000

Underapplied overhead during the year=Actual-Estimated=$1350000-$650000=$700000

If this amount is transferred to Cost of goods sold, thereby decreasing the net operating income.Because Cost of goods sold will increase (increase in expenses) which adversely affects the income.

Conclusion: Net operating income will decrease.

Please give your feedback!!! Happy Learning :)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At...
Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:     Machine-hours required to support estimated production . . . . . . 100,000     Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . $650,000    Variable manufacturing overhead cost per machine-hour . ....
Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At...
Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:      Machine-hours required to support estimated production 158,000 Total estimated manufacturing overhead cost $ 1,406,200 Required: 1. Compute the predetermined overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predetermined Overhead Rate: _________     2. During the year, Job 400 was started and completed. The following information was...
Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At...
Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates Machine-hours required to support estimated production 200,000 Fixed manufacturing overhead cost $1,300,000 Variable manufacturing overhead cost per machine-hour $3.00 1.a - Compute the predetermined overhead rate – (12 points) 1. b - During the year, Job 400 was started and completed. The following information was available with respect to this job Direct materials...
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours....
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 153,000 Fixed manufacturing overhead cost $ 654,000 Variable manufacturing overhead cost per machine-hour $ 4.70 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $...
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours....
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 151,000 Fixed manufacturing overhead cost $ 658,000 Variable manufacturing overhead cost per machine-hour $ 4.90 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $...
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours....
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 152,000 Fixed manufacturing overhead cost $ 654,000 Variable manufacturing overhead cost per machine-hour $ 5.00 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $...
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours....
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 159,000 Fixed manufacturing overhead cost $ 651,000 Variable manufacturing overhead cost per machine-hour $ 4.90 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $...
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours....
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 156,000 Fixed manufacturing overhead cost $ 653,000 Variable manufacturing overhead cost per machine-hour $ 4.30 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $...
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 31,800 Total fixed manufacturing overhead cost $ 159,000 Variable manufacturing overhead per machine-hour $ 2 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 660 Direct labor cost $ 1,320 The unit product...
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 32,000 Total fixed manufacturing overhead cost $ 352,000 Variable manufacturing overhead per machine-hour $ 3.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 40 Direct materials $ 675 Direct labor cost $ 1,350 The amount of...