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Picard Company uses a job-order costing system at its Kingston plant, which has a Machining Department and a Finishing Department. Its job costing system has two direct cost categories (direct materials and direct labour) and two overhead cost pools (the Machining Department, which allocates overhead costs on the basis of machine hours, and the Finishing Department which allocates overhead costs on the basis of direct labour costs). At the beginning of the year, the companys management made the following estimates:
	Machining Department	Finishing Department
Manufacturing overhead	$10,000,000	$8,000,000
Direct labour cost	$900,000	$4,000,000
Machine hours	200000	33000
During the month of January, the cost recorded for Job 711 shows the following:
	Machining Department	Finishing Department
Direct materials used	$14,000	$3,000
Direct labour cost	$600	$1,250
Machine hours	130	10
Required:
1. Compute the predetermined overhead rate used during the year in the Machining Department and also the predetermined overhead rate used in the Finishing Department.
2. Compute the total overhead cost applied to Job 711.
3. What would be the total cost recorded for Job 711? If the job contained 200 units, what would be the unit product cost?
4. At the end of the year, the records of Picard Company revealed the following actual cost and operating data for all jobs worked on during the year (below). Compute the under-applied or over-applied overhead in each department at the end of the year and prepare the journal entries to show the disposal of under/overapplied overhead in each department.
	Machining Department	Finishing Department
Manufacturing overhead incurred	$11,200,000	$7,900,000
Direct manufacturing labour cost	$950,000	$4,100,000
Machine hours	220000	32000
5. Explain why overhead was either over or underapplied.

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