Alles Company uses a job costing system that applies factory

Alles Company uses a job costing system that applies factory overhead on the basis of direct labor dollars No job was in process on February 1. During the month of February, the company worked on these three jobs Job Number B10 $41,000 49,000 G15 ? 13,500 C44 Direct labor ($9/hour) Direct materials Overhead applied 68,000 29,500 10,800 During the month, the company completed and transferred Job B10 to the finished goods inventory. Jobs C44 and G15 were not completed and remain in work in process at the cost of $152,150 at the end of the month. Actual factory overhead costs during the month totaled $49,000. Required: 1. What is the predetermined factory overhead rate? (Round your answer to 2 decimal places.) Overhead rate per direct labor dollar 2. Compute the amount of underapplied or overapplied overhead for February overhead

Solution

Part 1 - Calculation of predetermined facotry overhead rate

Predetermined overhead rate can be calculated from Job G15

Predetermined Factory overhead per direct labour dollar =

= Total Overhead/Total Direct labour cost

= $10800/$13500 = $0.8

Part 2 - Calculation of Under/Over applied Overhead

Predetermined overhead rate can be calculated from Job G15 Predetermined Factory overhead per direct labour dollar = = Total Overhead/Total Direct labour cost = $10800/$13500 = $0.8