Explore BrainMass
Share

Attached is a problem I need help with.

Dotsero Technology, Inc., has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate in Department A is based on machine-hours, and the rate in Department B is based on direct materials cost. At the beginning of the most recent year, the company's management made the following estimates for the year:

Department A Department B
Machine-hours 70,000 19,000
Direct labor-hours 30,000 60,000
Direct materials cost \$195,000 \$282,000
Direct labor cost \$260,000 \$520,000

Job 243 entered into production an April 1 and was completed on May 12. The company's cost records show the following information about the job:

Department A Department B
Machine-hours 250 60
Direct labor-hours 70 120
Direct materials cost \$840 \$1,100
Direct labor cost \$610 \$880

At the end of the year, the records of Dotsero showed the following actual cost and operating data for all jobs worked on during the year:

Department A Department B
Machine-hours 61,000 20,000
Direct labor-hours 28,000 66,000
Direct materials cost \$156,000 \$284,000

Required:

Part A: Compute the predetermined overhead rates for Department A and Department.

Part B: Compute the total overhead cost applied to Job 243.

Part C: Compute the amount of underapplied or overapplied overhead in each department at the end of the current year.

#### Solution Summary

The solution explains how to calculate the predetermined overhead rate, overhead applied and under or over applied overhead

\$2.19