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Required: Should any overhead cost be added to Job W at year-end? If so, how much? Explain.
EX. 2-10 Predetermined Overhead Rate; Applying Overhead; Underapplied or Overapplied Overhead Estimated cost and operating data for three companies for the upcoming year follow: Predetermined overhead rates are computed using the following allocation bases in the three companies:
EX. 2-10 Required: 1. Compute each company's predetermined overhead rate. 2. Assume that Company X works on three jobs during the upcoming year. Direct labor-hours recorded by job are: Job 418, 12,000 hours; Job 419, 36,000 hours; and Job 420, 30,000 hours. How much overhead will the company apply to Work in Process for the year? If actual overhead costs total \$530,000 for the year, will overhead be underapplied or overapplied? By how much?
Problem 2-20A Departmental Overhead Rates Meyers Company has two departments, Cutting and Finishing. The company uses a job-order cost system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor cost. At the beginning of the year , the company made the following estimates: 1. Compute the predetermined overhead rate to be used in each department.
Problem 2-20A 2. Assume that the overhead rates that you computed in (1) above are in effect. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Compute the total overhead cost applied to Job 203.
Problem 2-20A 3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide overhead rate based on direct labor cost, rather than using departmental rates? Explain. No computations are necessary