Calgary Injection Moulding operates a job-order costing system and applies overhead cost to jobs on the basis
Question:
Calgary Injection Moulding operates a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. In computing an overhead rate for the year, the company’s estimates were as follows: manufacturing overhead cost, $248,000, and machine-hours, 40,000. The company has provided the data in the following table:
Beginning......Ending
Raw Materials............$21,000..........$16,000
Work in Process.........$44,000.........$40,000
Finished Goods..........$68,000.........$60,000
The following actual costs were incurred during the year:
Purchase of raw materials (all direct) $133,000
Direct labour....................................................$ 80,000
Machine-hours.................................................. 42,000
Manufacturing overhead costs.......................$264,000
Required:
1.Compute the predetermined overhead rate for the year.
2. Compute the amount of under applied or over applied overhead for the year. How is over applied (under applied) overhead disposed of at year-end?
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer