Cardella Company 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 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.
Assignment of Costs
|
Direct materials: |
Job A16 $27,000, Job B17 $21,000 |
|
Indirect materials: |
$3,000 |
|
Direct labor: |
Job A16 $52,000, Job B17 $26,000 |
|
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 overapplied manufacturing overhead?