Cardella Manufacturing applies overhead on the basis of direct labor costs. The company estimates annual overhead costs will be $760,000 and annual direct labor costs will be $950,000. During February, Cardella Manufacturing works on two jobs: A16 and B17. Summary data concerning these jobs are as follows.
Manufacturing Costs Incurred
Purchased $54,000 of raw materials on account
Factory labor $76,000, plus $4,000 employer payroll taxes.
Manufacturing overhead exclusive of indirect materials and indirect labor $59,800.
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Assignment of Costs |
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Direct materials: |
Job A16 $27,000, Job B17 $21,000 |
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Indirect materials: |
$3,000 |
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Direct labor: |
Job A16 $52,000, Job B17 $26,000 |
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Indirect labor: |
$2,000 |
The company completed Job A16 and sold it on account for $150,000. Job B17 was only partially completed.
Instructions
(a) Compute the predetermined overhead rate.
(b) Journalize the February transactions in the sequence followed in the chapter.
(c) What was the amount of under or over applied manufacturing overhead?