Exercise 2-12 Computing Predetermined Overhead Rates and Job Costs [LO1, LO2, LO3, LO7]

Kody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		152,000
Fixed manufacturing overhead cost	$	655,000
Variable manufacturing overhead cost per machine-hour	$	4.30

Required:

1.	Compute the predetermined overhead rate. (Round your answer to 2 decimal places.)

Predetermined overhead rate

$ per MH

2.	During the year Job 500 was started and completed. The following information was available with respect to this job:

Direct materials requisitioned	$	370
Direct labor cost	$	250
Machine-hours used		31

Compute the total manufacturing cost assigned to Job 500. (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

Total manufacturing cost

$

3-a.

During the year the company worked a total of 146,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,261,060. What is the amount of underapplied or overapplied overhead for the year? (Input the amount as a positive value. Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

Manufacturing overhead cost (Click to select) underapplied overapplied by

$

3-b.

If this amount were closed out entirely to Cost of Goods Sold, would the journal entry increase or decrease net operating income?

	Increase
	Decrease