Estimated cost and operating data for three companies for the upcoming year follow:

Predetermined overhead rates are computed using the following bases in the three companies:

Company ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Overhead Rate Based OnX....................................................Direct labour-hoursY....................................................Machine-hoursZ....................................................Direct materials cost

Required:

1. Compute the predetermined overhead rate to be used in each company during the upcoming year.

2. Assume that Company X works on three jobs during the upcoming year. Direct labour-hours recorded by job are as follows: job 418, 18,000 hours; job 419, 26,000 hours; job 420, 38,000 hours. How much overhead cost will the company apply to work in process for the year? If actual overhead costs total $530,000 for the year, will overhead be under- or overapplied? By how much?

Transcribed Image Text:

Company Direct labour-hours 45,000 60,000 80,000 30,000 125,000 21,000 Machine-hours Direct materials cost Manufacturing overhead cost $400,000 $300,000 $290,000 $536,000 $520,000 $480,000