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Peter co makes shirts that it sells to retailers. The company uses a job order costing system in which predetermined overhead rates are used to apply factory overhead cost to jobs. The predetermined rate in the sewing department is based on machine hours and in cutting department is based on direct labor cost. The following estimates are made at the beginning of the year: (see picture) 2. Compute the factory overhead rate using the cutting department during the year

Peter co makes shirts that it sells to retailers. The company uses a job order costing system in which predetermined overhead rates are used to apply factory overhead cost to jobs. The predetermined rate in the sewing department is based on machine hours and in cutting department is based on direct labor cost. The following estimates are made at the beginning of the year: (see picture) 2. Compute the factory overhead rate using the cutting department during the year

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 4BE: Applying factory overhead Bergan Company estimates that total factory overhead costs will be 620,000...
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Peter co makes shirts that it sells to retailers. The company uses a job order costing system in which predetermined overhead rates are used to apply factory overhead cost to jobs. The predetermined rate in the sewing department is based on machine hours and in cutting department is based on direct labor cost.

The following estimates are made at the beginning of the year: (see picture)

2. Compute the factory overhead rate using the cutting department during the year

Sewing 24,000 Cutting 120,000 Direct Labor Hours Machine Hours Direct Material Cost Direct Labor Cost 140,000 1,020,000 260,000 1,204,000 10,000 1,300,000 840,000 1,470,000 Factory Overhead Cost Job 101 was started on Feb 1 and completed on Feb 25. The company's cost records show the following information concerning the job. Sewing Cutting Direct Labor Hours Machine Hours 60 170 220 40 Material Used 940 664 Direct Labor Cost 580 1,360 At the end of the year, the records of the company show the actual cost and data for all the jobs worked during the year. Sewing 20,000 Cutting 124,000 Direct Labor Hours Machine Hours 130,000 18,000 Direct Material Cost 860,000 216,000 1,140,000 1,360,000 872,000 1,500,000 Direct Labor Cost Factory Overhead Cost
Transcribed Image Text:Sewing 24,000 Cutting 120,000 Direct Labor Hours Machine Hours Direct Material Cost Direct Labor Cost 140,000 1,020,000 260,000 1,204,000 10,000 1,300,000 840,000 1,470,000 Factory Overhead Cost Job 101 was started on Feb 1 and completed on Feb 25. The company's cost records show the following information concerning the job. Sewing Cutting Direct Labor Hours Machine Hours 60 170 220 40 Material Used 940 664 Direct Labor Cost 580 1,360 At the end of the year, the records of the company show the actual cost and data for all the jobs worked during the year. Sewing 20,000 Cutting 124,000 Direct Labor Hours Machine Hours 130,000 18,000 Direct Material Cost 860,000 216,000 1,140,000 1,360,000 872,000 1,500,000 Direct Labor Cost Factory Overhead Cost
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