Question

Brooks Foundry in Charleston, South Carolina, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following: (Click the icon to view the costs.) Requirements Compute Brooks' predetermined manufacturing overhead rate. How much manufacturing overhead was allocated to jobs during the year? How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much? Were the jobs overcosted or undercosted? By how much? Requirement 1. Compute Brooks' predetermined manufacturing overhead rate. (Round your answer to the nearest dollar.) Determine the formula to calculate the predetermined overhead rate, then calculate the rate. / = Predetermined overhead rate At the beginning of the year, the company expected to incur the following. Manufacturing overhead costs $ 650,000 Direct labor cost $ 1,300,000 Machine hours 81,250 At the end of the year, the company had actually incurred: Direct labor cost $ 1,190,000 Depreciation on manufacturing plant and equipment $ 485,000 Property taxes on plant $ 21,500 Sales salaries $ 26,000 Delivery drivers' wages $ 14,500 Plant janitors' wages $ 11,000 Machine hours 54,500 hours

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

The company expected to incur the following:

Manufacturing overhead costs $ 650,000

Direct labor cost $ 1,300,000

Machine hours 81,250

At the end of the year, the company had incurred:

Direct labor cost $ 1,190,000

Depreciation on manufacturing plant and equipment $ 485,000

Property taxes on plant $ 21,500

Sales salaries $ 26,000

Delivery drivers' wages $ 14,500

Plant janitors' wages $ 11,000

Machine hours 54,500 hours

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 650,000/81,250= $8 per machine hour

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 8*54,500= 436,000

Total real MOH= Depreciation on manufacturing plant and equipment + Property taxes on plant + Plant janitors' wages

Total real MOH= 485,000 + 21,500 + 11,000= $517,500

Over/under allocation= real MOH - allocated MOH= 517,500 - 436,000= $81,500 underllocated

Over/under costed= (650,000 + 1,300,000) - (1,190,000 + 517,500)= 242,500 overcosted