# 3.1.PNG - Exercise 7-27 Predetennined Overhead Rates(LO T-3...

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Unformatted text preview: Exercise 7-27 Predetennined Overhead Rates (LO T-3) Dir-:boro Company manufactures one product and accounts for costs using a job cost system. You have obtained the following information from the corporation’s books and records for the ﬁscal year ended May 31, year 1: - Total manufacturing cost dunng the year was \$15,500,000 based on actual direct material, actual direct labor, and applied manufacturing overhead. - Manufacturing overhead was applied to work in process at 150 percent (1.5 times) direct labor dollars. Applied manufacturing overhead for the year was 40 percent of the total manufacturing cost during the year. Required: Compute actual direct material used, actual direct labor, and applied manufacturing overhead. {Hrnt The total of these costs is \$16,500,000.) Direct material used Direct Ia bor Manufactu ri rig overhead applied 5: 5,500,000 \$ 4,400,000 \$ 5,600,000 Explanation: Direct material used 5) 5,500,001}: Direct labor 4,400,000b Manufacturing overhead applied 6,600,0003 Total manufacturing cost during the year \$16,500,000 Supporting Computations a)ﬂipplied manufacturing overhead: \$6,500,000 = 40% :4 Total manufactunng cost (40% x \$16,500,000). bDirect labor: 150% of direct labor equals \$6,600,000, so Direct labor was \$4,400,000 = (\$5,500,000 + (1.5)). cDirect material used equals Total manufacturing cost less Direct labor and Manufacturing overhead applied [\$16,500,000 — {\$6,600,000 + \$4,400,000) = \$5,500,000]. ...
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