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Far Play Company uses a job order cost system in each of its three manufacturing...

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Accounting

Far Play Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labour cost in Department A, direct labour hours in Department B, and machine hours in Department C.

In establishing the predetermined overhead rates for 2017, the following estimates were made for the year.

Department

A

B

 C

Manufacturing Overhead

$720,000

$620,000

$910,000

Direct labour Cost

$590,000

$125,000

$620,000

Direct labour Hours

47,500

41,500

40,000

Machine Hours

91,000

107,000

128,500

During January, the job cost sheets showed the following costs and production data.

Department

A

 B

C

Direct Materials Used

$92,500

$82,000

$66,000

Direct Labour Cost

$54,500

$33,000

$48,500

Manufacturing Overhead Incurred

$63,500

$69,500

$72,500

Direct Labour Hours

3,500

4,400

4,400

Machine Hours

7,250

10,750

14,500

Required:

  1. Calculate the predetermined overhead rate for each department

  2. Calculate the total manufacturing costs assigned to jobs in January in each department.

  3. Calculate the under-or over-applied overhead for each department at January 31st.

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