Determine the over or underapplied overhead for each department at the end of January

Gergia Woods Inc manufactures furniture to customers specifications and uses job order costing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Dept one, overhead is applied on the basis of machine hours, in department two, on the basis of direct labor hours

Dept 1 Dept 2
Direct Labor Cost $300000 $225000
Direct Labor hours 20000 15000
Manufacturing Overhead $420000 $337500
Machine Hours 12000 7500

Production of a batch of custome furniture ordered by City Furniture (job no.58) was started early in the year and completed 3 weeks later oin Jan 29. The records for thisjob show the following cost information.

Dept 1 Dept 2
Job order City Furniture
Direct Materials cost $10100 $7600
Direct Labor Cost $16,500 $11,100
Direct Labor hours 1100 740
Machine hours 750 500

Selected additional information for January as follows:

Dept 1 Dept 2
Direct Labor Hours-month of January 1600 1200
Machine hours -month of January 1100 600
Manufacturing overhead incurred in January $39,010 $26,540

a. Compute the predetermined overhead rate for each department

b. What is the total cost of the furniture produced for City Furniture

c. Prepare the entries required to record the sale (on account) of the furniture to City Furniture. The sales price of theorder was $147,000

d. determine the over or underapplied  overhead for each department at the end of January

 

Solution:

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