Dotsero Technology, Inc $\quad$ $\quad$ $\quad$

Dotsero Technology, Inc., has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate in Department A is based on machine hours, and the rate in Department B is based on direct materials cost. At the beginning of the most recent year, the company's management made the following estimates for the year:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\underline { \text { Department } }$
$\begin{array}{lrr}&A&B\\\text { Machine-hours } & 70,000 & 19,000 \\\text { Direct labour-hours } & 30,000 & 60,000 \\\text { Direct materials cost } & \$ 195,000 & \$ 282,000 \\\text { Direct labour cost } & \$ 260,000 & \$ 520,000 \\\text { Manufacturing overhead cost } & \$ 420,000 & \$ 705,000\end{array}$
Job 243 entered into production on April 1 and was completed on May 12. The company's cost records show the following information about the job:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\underline { \text { Department } }$
$\begin{array}{lrr}&A&B\\\text { Machine-hours } & 250 & 60 \\\text { Direct labour-hours } & 70 & 120 \\\text { Direct materials cost } & \$ 840 & \$ 1,100 \\\text { Direct labour cost } & \$ 610 & \$ 880\end{array}$
At the end of the year, the records of Dotsero showed the following actual cost and operating data for all jobs worked on during the year:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\underline { \text { Department } }$
$\begin{array}{lrr}&A&B\\\text { Machine-hours } & 61,000 & 20,000 \\\text { Direct labour-hours } & 28,000 & 66,000 \\\text { Direct materials cost } & \$ 156,000 & \$ 284,000 \\\text { Manufacturing overhead cost } & \$ 385,000 & \$ 705,000\end{array}$
Required:
a.) Compute the predetermined overhead rates for Department A and Department B.
b.) Compute the total overhead cost applied to Job 243.
c.) Compute the amount of underapplied or overapplied overhead in each department at the end of the current year.

Correct Answer:

Verified

a.) Department A predetermined overhead ...

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