Landis Company Uses a Job Order Cost System in Each

question 186

Essay

Landis Company uses a job order cost system in each of its two manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department A and machine hours in Department B. In establishing the predetermined overhead rates for 2017 the following estimates were made for the year:
During January the job cost sheet showed the following costs and production data: $$\begin{array} { l r r } & { \text { Department } } \\& \mathrm { A }& \mathrm { B }\\\text { Direct materials used } & \$195,000& \$ 128,000 \\\text { Direct labor cost } & \$ 195,000 & 110,000 \\\text { Manufacturing overhead incurred } & 100,000 & 135,000 \\\text { Direct labor hours } & 130,000 & 8,400 \\\text { Machine hours } & 8,000 & 34,000\end{array}$$ Instructions
(a) Compute the predetermined overhead rate for each department.
(b) Compute the total manufacturing cost assigned to jobs in January in each department.
(c) Compute the balance in the Manufacturing Overhead account at the end of January and indicate whether overhead is over- or underapplied.

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