# UCD Company uses a job costing accounting system for its production costs. A predetermined overhead rate based

## Question:

UCD 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:

The expected volume is 40,000 direct labor-hours for the entire year. The following information is for October, when jobs 1011 and 1015 were completed.

Required
a. Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year.
(Note: Regardless of your answer to requirement [a], assume that the predetermined overhead rate is $25 per direct labor-hour. Use this amount in answering requirements [b] through [e].) b. Compute the total cost of Job 1011 when it is finished. c. How much of factory overhead cost was applied to Job 1017 during October? d. What total amount of overhead was applied to jobs during October? e. Compute actual factory overhead incurred during October. f. At the end of the year, UCD Company had the following account balances: Balance Underapplied Overhead . . . . . . . . .$ 3,000,000
Cost of Goods Sold . . . . . . . . . . . . . 28,000,000
Work-in-Process Inventory . . . . . . . . 4,000,000
Finished Goods Inventory . . . . . . . . 8,000,000

How would you recommend treating the Underapplied Overhead? Show the effect on the account balances in the following table.
Over-applied Overhead . . . . . . . . . . _________
Cost of Goods Sold . . . . . . . . . . . . . _________
Work-in-Process Inventory . . . . . . . . _________
Finished Goods Inventory . . . . . . . . _________

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