Georgia Woods, Inc., manufactures furniture to customers specifications and uses job order costing. A predetermined overhead rate

Georgia Woods, Inc., manufactures furniture to customers’ specifications and uses job order costing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Department One, overhead is applied on the basis of machine-hours, and in Department Two, on the basis of direct labor hours. At the beginning of the current year, management made the following budget estimates to assist in determining the overhead application rate:

Production of a batch of custom furniture ordered by City Furniture (job no. 58) was started early in the year and completed three weeks later on January 29. The records for this job show the following cost information:

Selected additional information for January is as follows:

Instructions
a. Compute the predetermined overhead rate for each department.
b. What is the total cost of the furniture produced for City Furniture?
c. Prepare the entries required to record the sale (on account) of the furniture to City Furniture.
The sales price of the order was $147,000.
d. Determine the over- or underapplied overhead for each department at the end ofJanuary.

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Department Department One Two Direct labor cost Direct labor hours Manufacturing overhead Machine-hours. $300,000 20,000 $420,000 12,000 $225,000 15,000 $337,500 7,500 Department Department One Two Job order for City Furniture (job no. 58): Direct materials cost Direct labor cost Direct labor hours Machine-hours $10,100 $16,500 1,100 750 7,600 $11,100 740 500 Department Department One 1,600 1,100 Two Direct labor hours-month of January Machine-hours-month of January Manufacturing overhead incurred in January... 1,200 600 $26,540 ····· $39,010