Question

# Verizox Company uses a job order cost system with manufacturing overhead applied to products based on...

Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at \$195,940. Estimated direct labor cost was \$465,600 for 19,400 hours.

Actual costs for the most recent month are summarized here:

 Item Description Total Cost Direct labor (1,940 hours) \$ 46,561 Indirect costs Indirect labor 2,530 Indirect materials 3,360 Factory rent 3,230 Factory supervision 4,820 Factory depreciation 5,650 Factory janitorial work 1,210 Factory insurance 1,790 General and administrative salaries 4,140 Selling expenses 5,480

Required:
1.

2. Calculate the amount of applied manufacturing overhead.

3. Calculate actual manufacturing overhead costs.

4. Compute over- or underapplied overhead.

1. Predetermined overhead rate = Estimated manufacturing overhead/ Estimated no of hours

=\$195,940/19,400

=\$10.1

2. Applied manufacturing overhead = 1,940×\$10.1 =\$19,594

 Indirect labor \$2,530 Indirect materials \$3,360 Factory rent \$3,230 Factory supervision \$4,820 Factory Depreciation \$5,650 Factory janitorial work \$1,210 Factory insurance \$1,790 Actual manufacturing overhead \$22,590

4.

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