Problem 7-46 Analysis of Overhead Using a Predetermined Rate (LO 7-3) Script Company uses a job costing accounting system for its production costs. A predetermined overhead rate based on direct labor-hours is used to apply overhead to individual jobs. An estimate of overhead costs at different volumes was prepared for the current year as follows: Direct labor-hours Variable overhead costs Fixed overhead costs Total overhead 18,000 $ 864,000 1,200,000 $2,064,000 24,000 $1,152,000 1,200,000 $2,352,000 30,000 $1,440,000 1,200,000 $2,640,000 The expected volume is 24,000 direct labor-hours for the entire year. The following information is for October, when jobs 1011 and 1015 were completed: $ 100,800 219,120 546,960 Inventories, October 1 Raw materials and supplies Work in process (Job 1011) Finished goods Purchases of raw materials and supplies Raw materials Supplies Materials and supplies requisitioned for production Job 1011 Job 1015 Job 1017 Supplies 1,509,600 190,320 674,400 562,800 113,280 184,080 $ 1,534,560 7,440 MH 7,320 MH 4,440 MH 8,400 DLH 3,660 DLH 2,220 DLH Machine-hours (MH) Job 1011 Job 1015 Job 1017 Direct labor-hours (DLH) Job 1011 Job 1015 Job 1017 Labor costs Direct labor wages (all hours @ $48) Indirect labor wages (12,000 hours) Supervisory salaries Building occupancy costs (heat, light, depreciation, etc.) Factory facilities Sales and administrative offices Factory equipment costs Power Repairs and maintenance Other $ 685,440 151,200 307,200 88,560 34,080 52,320 19,680 23,760 95,760 $ (Note: Regardless of your answer to requirement [a], assume that the predetermined overhead rate is $100 per direct labor-hour. Use this amount in answering requirements [b] through [e].) Required: a. Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year. Overhead rate per DLH b. Compute the total cost of Job 1011 when it is finished. The total cost of Job 1011 c. How much of factory overhead cost was applied to Job 1017 during October? Factory overhead cost of Job 1017 d. What total amount of overhead was applied to jobs during October? Amount of overhead e. Compute actual factory overhead incurred during October. Actual factory overhead f. At the end of the year, Script Company had the following account balances: Underapplied overhead Cost of goods sold Work-in-process inventory Finished goods inventory Balance $ 7,200,000 67,200,000 9,600,000 19,200,000 Show the Underapplied Overhead effect on the account balances in the following table. Underapplied overhead Cost of goods sold Work-in-process inventory Finished goods inventory