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Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.

In establishing the predetermined overhead rates for 2017, the following estimates were made for the year.

Department

D

E

K

Manufacturing overhead

$1,200,000

$1,500,000

$900,000

Direct labor costs

$1,500,000

$1,250,000

$450,000

Direct labor hours

100,000

125,000

40,000

Machine hours

400,000

500,000

120,000

During January, the job cost sheets showed the following costs and production data.

Department

D

E

K

Direct materials used

$140,000

$126,000

$78,000

Direct labor costs

$120,000

$110,000

$37,500

Manufacturing overhead incurred

$ 99,000

$124,000

$79,000

Direct labor hours

8,000

11,000

3,500

Machine hours

34,000

45,000

10,400

Instructions

  1. Compute the predetermined overhead rate for each department.

    80%, $12, $7.50

  2. Compute the total manufacturing costs assigned to jobs in January in each department.

    $356,000, $368,000, $193,500

  3. Compute the under- or overapplied overhead for each department at January 31.

    $3,000, $(8,000), $1,000

Analyze manufacturing accounts and determine missing amounts.

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