Exercise 4-8 Computing Predetermined Overhead Rates and Job Costs [LO4-1, LO4-2, LO4-3, LO4-4]

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 production151,000

Fixed manufacturing overhead cost$658,000

Variable manufacturing overhead cost per machine-hour$4.90

Required:

1. Compute the predetermined overhead rate.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

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

Direct materials requisitioned$320

Direct labor cost$220

Machine-hours used35

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

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 $1,354,460. What is the amount of underapplied or overapplied overhead for the year?(Round your intermediate calculations to 2 decimal places.)

3-b. If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease? IncreaseDecrease