Refer to Problem 4-26. If you have not completed that problem, do so at this time.

In Problem 4-26

Because the microscopes' optics require significant manual labor to ensure adherence to strict manufacturing specifications, the company applies overhead on the basis of direct labor hours. At the beginning of 2017, the company estimated its manufacturing overhead would be $1,960,000 and that employees would work a total of 98,000 direct labor hours.

During March, the company worked on the following five jobs:

Jobs 134 and 158 were started in January, Jobs 212 and 287 were started in February, and
Job 301 was started in March. During March, workers completed Jobs 134, 158, and 212.
Jobs 134 and 212 were delivered to customers during March.
Actual overhead for the month of March was $176,300.

Required
a. Paladin Parabolics Company incurred $176,300 manufacturing overhead in the month of March. Given that expenditure for overhead, was manufacturing overhead under- or over-applied in March? By how much?
b. Assume that Paladin Parabolics Company closes under- or over-applied overhead to the Cost of Goods Sold account. Calculate the Cost of Goods Sold amount after that adjustment.
c. Assume that Paladin Parabolics Company prorates under-or over-applied overhead to the appropriate accounts. Calculate the allocated amounts and adjust the account balances as needed.
d. Which method of under- or overapplied overhead disposition is more appropriate for Paladin Parabolics Company? Why?
e. Job 212 was for 1,000 microscopes. What was the unit cost for the microscopes produced in this job? Is this the actual cost of producing this job? Why or why not?

Transcribed Image Text:

Direct Materials added during March Direct Labor added during March Direct Labor Hours added during March 150 Beginning 134 158 212 287 301 Balance $118,600 121,450 21,800 34,350 $ 8,400 12,160 36,650 31,850 21,845 $110,905 $4,000 86,400 71,800 18,990 $183,690 3,450 2,700 1,400 8,000 Total$296,200