Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The company applies manufacturing overhead using machine hours in the Machining Department and direct-labor cost in the Assembly Department. The following information relates to the year just ended:

The data that follow pertain to job no. DC66, the only job in production at year-end.

Selling and administrative expense amounted to $2,325,000.

Required:
1. Assuming the use of normal costing, determine the predetermined overhead rates used in the Machining Department and the Assembly Department.
2. Compute the cost of the company€™s year-end work-in-process inventory.
3. Determine whether overhead was under- or overapplied during the year in the Machining Department.
4. Repeat requirement (3) for the Assembly Department.
5. If Juarez disposes of under- or overapplied overhead as an adjustment to Cost of Goods Sold, would the company€™s Cost of Goods Sold account increase or decrease? Explain.
6. How much overhead would have been charged to the company€™s Work-in-Process account during the year?
7. Comment on the appropriateness of the company€™s cost drivers (i.e., the use of machine hours in Machining and direct-labor cost inAssembly).

Machining Department Assembly Department Budgeted manufacturing overhead... Actual manufacturing overhead Budgeted direct-labor cost (pased on practical capacity Actual direct-labor cost Budgeted machine hours (based on practical capacity). Actual machine hours $2,000,000 2,130,000 750,000 725,000 200,000 212,500 $1,540,000 1,525,000 2,800,000 2,890,000 50,000 55,000 Machining Department $12,250 $13,950 Assembly Department s 3,350 $29,300 Direct material.. Direct labor Machine hors 180 75