Question

Southern Rim Parts estimates its manufacturing overhead to be $318,000 and its direct labor costs to be $1,060,000 for year 1. The first three jobs that Southern Rim worked on had actual direct labor costs of $65,000 for Job 301, $90,000 for Job 302, and $175,000 for Job 303. For the year, actual manufacturing overhead was $399,000 and total direct labor cost was $834,000. 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 303.

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

Answer 1

	predetermined overhead rate
	estimated manufacturing overhead/estimated direct labor costs
	318000/1060000
	30%
a)				job 301	job 302	job 303
	actual direct labor costs			65,000	90,000	175,000
	overhead rate			30%	30%	30%
	manufacturing overhead applied			19500	27000	52500	answer
b)	Actual manufacturing overhead					399,000
	MOH applied		(834000*30%)			250200
	overhead under applied					148,800	answer