Question

Problem 2-4A (Video)

Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.

In establishing the predetermined overhead rates for 2020, the following estimates were made for the year.

		Department
		D		E		K
Manufacturing overhead		$990,000		$1,750,000		$1,080,000
Direct labor costs		$1,237,500		$1,875,000		$675,000
Direct labor hours		150,000		125,000		60,000
Machine hours		600,000		750,000		120,000

During January, the job cost sheets showed the following costs and production data.

		Department
		D		E		K
Direct materials used		$210,000		$189,000		$117,000
Direct labor costs		$180,000		$165,000		$56,250
Manufacturing overhead incurred		$148,500		$168,000		$118,500
Direct labor hours		12,000		16,500		5,250
Machine hours		51,000		67,500		10,410

Compute the predetermined overhead rate for each department. (Round answers to 2 decimal places, e.g. 12.50 or 12.50%.)

		Overhead rate
Department D			%
Department E		$	per direct labor hour
Department K		$	per machine hour

Compute the total manufacturing costs assigned to jobs in January in each department.

		Manufacturing Costs
Department D		$
Department E		$
Department K		$

Compute the under- or overapplied overhead for each department at January 31.

		Manufacturing Overhead
Department D		$	UnderappliedOverapplied
Department E		$	UnderappliedOverapplied
Department K		$	UnderappliedOverapplied

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Answer 1

Compute the predetermined overhead rate for each department. (Round answers to 2 decimal places, e.g. 12.50 or 12.50%.) Overhead rate Department D 990000/1237500 = 80 % Department E $1750000/125000 = 14 per direct labor hour Department K $1080000/120000 = 9 per machine hour

Compute the total manufacturing costs assigned to jobs in January in each department. Manufacturing Costs Department D $210000+180000+180000*80% = 534000 Department E $189000+165000+16500*14 = 585000 Department K $117000+56250+10410*9 = 266940

Compute the under- or overapplied overhead for each department at January 31. Manufacturing Overhead Department D $144000-148500 = 4500 Underapplied Department E $231000-168000 = 63000 Overapplied Department K $93690-118500 = 24810 Underapplied Click if you would like to Show Work for this question: Open Show Work