Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following:

Requirements:

1. Compute Smith’s predetermined manufacturing overhead rate.
2. How much manufacturing overhead was allocated to jobs during the year?
3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much?
4. Were the jobs overcosted or undercosted? By how much?

Transcribed Image Text:

Manufacturing overhead costs....... Direct labor cost... Machine hours....... At the end of the year, the company had actually incurred the following: $ 630,000 $1,650,000 90,000 Direct labor cost... Depreciation on manufacturing plant and equipment... Property taxes on plant............ Sales salaries Delivery drivers' wages. Plant janitors' wages Machine hours....... $1,230,000 $ 480,000 $ 19,500 $ 26,500 $ 17,000 $ 8,500 56,500 hours