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# Job order costing for AHDI Corporation: Under/Over Applied O

AHDI Corporation uses a job-costing system at its plant. The plant has a machining department and a finishing department. The machining department allocates overhead to the jobs based on machine hours and the finishing department allocates overhead to the jobs based on direct labor costs.

The budget for the plant is as follows:

Machining Department Finishing department

Machine Hours 12,000 2,000
Machine Repair Costs \$1,400,000 \$200,000
Direct Labor costs \$2,000,000 \$1,000,000
Direct Labor hours 40,000 50,000

Calculate the overhead allocation rates for each department

The job cost record for job 6789 is a s follows;

Machining Department Finishing department

Direct Materials Used \$70,000 \$10,000
Machine Hours 1,245 13
Direct Labor costs \$20,000 \$15,000
Direct Labor hours 375 450

Calculate the Normal cost of Job 6789

The actual result for the year is as follows:

Machining Department Finishing department

Machine Hours 11,200 1,800
Machine Repair Costs \$1,200,000 \$210,000
Direct Labor costs \$2,500,000 \$2,000,000
Direct Labor hours 35,000 57,500

Calculate the Actual Cost of Job 6789

Calculate the total amount of Under/Over Applied Overhead for the year.

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#### Solution Summary

Your calculations are in Excel for you so you now have a template to use for other similar problems. The solution discusses the job order costing for AHDI corporation regarding under/over applied overhead.

\$2.19