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Jones Inc. computes its predetermined overhead rate annually on the basis of machine hours.At the beginning of the year it estimated that its total manufacturing overhead would be$900,000 and the total machine hours (mh) would be 45,000. Its actual total manufacturingoverhead for the year was $995,000 and its actual machine hours were 50,000. What is thepredetermined overhead rate for the year? Show Computations.

Predetermined Overhead Rate = estimated o/h / estimated hours= $900,000/45,000 = $20/hour

Snapper Corp. computes its predetermined overhead rate annually on the basis of direct-laborhours. At the beginning of the year it estimated that its total manufacturing overhead would be$240,000 and the total direct labor hours (dlh) would be 6,000. Its actual total manufacturingoverhead for the year was $210,000 and its actual direct labor hours were 5,400. How muchwould be applied to the jobs for the year? Show Computations.

Predetermined Overhead Rate (POR) = $240,000/6000 = $40/hour

Overhead applied = actual hours * POR = 5400*$40 = $216,000

Smith Jones Company uses a predetermined overhead rate of 75% of direct labor cost. Thispredetermined rate was based on $60,000 estimated direct labor cost and $45,000 of estimatedtotal manufacturing overhead. The company incurred actual total manufacturing costs of$52,000 and $71,000 of direct labor cost during the period. What is the amount of under-appliedmanufacturing overhead? Show Computations.

Actual overhead $52,000Less applied overhead (71,000 x 75%) $53,250Over-applied overhead $1,250

Tanner Bay Inc. has two departments, Assembly and Packaging. The company uses a job-ordercosting system and computes a predetermined overhead rate in each department. The

Assembly Department bases its rate on machine hours and the Packaging Department basesits rate on direct labor hours. At the beginning of the year, the company made the followingestimates: Assembly Packaging Direct Labor-hours 3,000 4,000 Machine-hours 8,500 9,900Manufacturing Overhead $144,500 $172,000 Direct labor cost $89,200 $101,000 Assume alsothe following actual data on Job #503 which was started and completed during the year:

Assembly Packaging Direct Labor-hours 23 37 Machine-hours 109 142 ManufacturingOverhead $8,787 $6,566 Direct labor cost $2,100 $1,990 What is the predetermined overheadrate to be used in each department? Show Computations

Predetermined Overhead Rate-Assembly Dept. = $144,500/8500 = $17/Machine hourPredetermined Overhead Rate-Packaging Dept. = $172,000/4000= $43/Labor hour

XYZ Corporation has two departments, Machining and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each department. TheMachining Department bases its rate on machine hours and the Assembly Department bases itsrate on direct labor cost. At the beginning of the year, the company made the followingestimates; Machining Assembly Direct Labor-hours 11,000 9,000 Machine-hours 23,000 14,000Manufacturing Overhead $368,000 $312,000 Direct labor cost $102,100 $78,000 Assume also

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the following actual data on Job #219 which was started and completed during the year:Machining Assembly Direct Labor-hours 104 98 Machine-hours 189 290 ManufacturingOverhead $33,400 $44,200 Direct labor cost $4,200 $9,600 What is the total cost assigned toJob #219? Show Computation.

Manufacturing Overhead Rate-Machining Dept. = $368,000/23,000 = $16/hour

Manufacturing Overhead Rate-Assembly Dept. = $312,000/78,000 = 4 (400% of Labor Cost)

Total Cost Assigned to Job 219:

Material

-Machining $33,400

-Assembly $44,200 $77,600

Labor

-Machining $4,200-Assembly $9,600 $13,800

Overhead

-Machining (189*16) $3,024

-Assembly (9600*400%) $38,400 $41,424

Total Cost $132,824