Manchester Ltd Actual Manufacturing Overhead Costs Incurred in December Were £31,000

question 10

Essay

Manchester Ltd. uses a job-order costing system and a predetermined overhead rate based on machine hours.
At the beginning of the year, the company estimated manufacturing overhead for the year would be £135,000 and 9,000 machine hours would be used.
The following information pertains to December of the current year: $\begin{array}{lrrrr}&\text { Job No. } & \text { Job No. } & \text { Job No. } & \\&380 & \underline{381} & \underline{382} & \text { Totals } \\\hline\text { Work in process, December 1 } & £ 8,000 & £ 13,000 & £ 19,000 & £ 40,000 \\\text { December production activity: } & & & & \\\text { Materials requisitioned } & £ 2,000 & £ 2,400 & £ 3,600 & £ 8,000 \\\text { Direct labour costs } & £ 1,200 & £ 1,800 & £ 2,000 & £ 5,000 \\\text { Machine hours } & 400 & 700 & 900 & 2,000\end{array}$ Actual manufacturing overhead costs incurred in December were £31,000.
a.Compute the predetermined overhead application rate.
b.Determine the total cost associated with each job.

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Definitions:

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