Question

Southern Rim Parts estimates its manufacturing overhead to be $282,000 and its direct labor costs to be $940,000 for year 1. The first three jobs that Southern Rim worked on had actual direct labor costs of $53,000 for Job 301, $78,000 for Job 302, and $115,000 for Job 303. For the year, actual manufacturing overhead was $459,000 and total direct labor cost was $846,000. Manufacturing overhead is applied to jobs on the basis of direct labor costs using predetermined rates.

Required:

a. How much overhead was assigned to each of the three jobs, 301, 302, and 30?

b. What was the over- or underapplied manufacturing overhead for year 1?

Please show work and explain

Answer 1

	predetermined overhead rate
	estimated manufacturing overhead/estimated direct labor costs
	282000/940000
	30%
a)				job 301	job 302	job 303
	actual direct labor costs			53,000	78,000	115,000
	overhead rate			30%	30%	30%
	manufacturing overhead applied			15900	23400	34500	answer
b)	Actual manufacturing overhead					459,000
	MOH applied		(846000*30%)			253800
	overhead under applied					205,200	answer