Agassi 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 2017, the following estimates were made for the year. D $1,200,000 $1,500,000 Manufacturing overhead Direct labor costs Direct labor hours Machine hours During January, the job cost sheets showed the following costs and production data. Department E $126,000 $110,000 $124,000 Direct materials used Direct labor costs Manufacturing overhead incurred Direct labor hours Machine hours Department E $1,500,000 $1,250,000 100,000 400,000 D $140,000 $120,000 $ 99,000 8,000 34,000 125,000 500,000 11,000 45,000 $900,000 $450,000 40,000 120,000 K $78,000 $37,500 $79,000 3,500 10,400 Instructions (a)Compute the predetermined overhead rate for each department. (b) Compute the total manufacturing costs assigned to jobs in January in each department. (c) Compute the under- or overapplied overhead for each department at January 31.
Agassi 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 2017, the following estimates were made for the year. D $1,200,000 $1,500,000 Manufacturing overhead Direct labor costs Direct labor hours Machine hours During January, the job cost sheets showed the following costs and production data. Department E $126,000 $110,000 $124,000 Direct materials used Direct labor costs Manufacturing overhead incurred Direct labor hours Machine hours Department E $1,500,000 $1,250,000 100,000 400,000 D $140,000 $120,000 $ 99,000 8,000 34,000 125,000 500,000 11,000 45,000 $900,000 $450,000 40,000 120,000 K $78,000 $37,500 $79,000 3,500 10,400 Instructions (a)Compute the predetermined overhead rate for each department. (b) Compute the total manufacturing costs assigned to jobs in January in each department. (c) Compute the under- or overapplied overhead for each department at January 31.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 4BE: Applying factory overhead Bergan Company estimates that total factory overhead costs will be 620,000...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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