Exercise 3-14 Computing Predetermined Overhead Rates and Job Costs [LO3-1, LO3-2, LO3-3, LO3-7]

Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		100,000
Fixed manufacturing overhead cost	$	650,000
Variable manufacturing overhead cost per machine-hour	$	3.00

Required:

1.	Compute the predetermined overhead rate. (Round your answer to 2 decimal places.)

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2.	During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials requisitioned	$	450
Direct labor cost	$	210
Machine-hours used		40

	Compute the total manufacturing cost assigned to Job 400. (Round your intermediate calculations to 2 decimal places.)

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3-a.	During the year the company worked a total of 146,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,350,000. What is the amount of underapplied or overapplied overhead for the year? (Round your intermediate calculations to 2 decimal places.)

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3-b.	If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease?
	Increase Decrease