Accounting II (Ludwig)

Graded Assignment 7 Chapter 19

Spring 2019

In December 2017, Challenger Watercrafts manager estimated next years (2018) total direct labor cost assuming five employees working an average of 2,000 hours each at an average wage rate of $10 per hour ($100,000). The manager also estimated manufacturing overhead costs for 2017 of $200,000.

At the end of 2018, records show the company incurred $199,000 of actual overhead costs.

The following jobs were started and completed and were charged with the following direct material and labor costs.

Job	Direct Material	Direct Labor	Manufacturing Overhead	Total Cost of Job
136	$50,000	$12,100
137	$33,000	$10,800
138	$19,800	$37,500
139	$22,600	$39,400
140	$6,800	$3,200
Totals	$132,200	$103,000

Required

1. Determine the predetermined overhead rate for 2018. The company assigns overhead costs based upon direct labor cost.
2. Determine the manufacturing overhead cost applied to each of the six jobs and in total and enter in the table above.
3. Determine the total cost of each of the six jobs and enter in the table above.
4. Determine the amount of over or underapplied manufacturing overhead and label appropriately. You might consider representing the manufacturing overhead temporary expense account as a T-account with actual costs on the debit side and applied costs on the credit side.