Problem 20-4A
Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.
In establishing the predetermined overhead rates for 2017, the following estimates were made for the year.
Department
D
E
K
Manufacturing overhead
$1,200,000
$1,500,000
$900,000
Direct labor costs
$1,500,000
$1,250,000
$450,000
Direct labor hours
100,000
125,000
40,000
Machine hours
400,000
500,000
120,000
During January, the job cost sheets showed the following costs and production data.
Department
D
E
K
Direct materials used
$140,000
$126,000
$78,000
Direct labor costs
$120,000
$110,000
$37,500
Manufacturing overhead incurred
$99,000
$124,000
$79,000
Direct labor hours
8,000
11,000
3,500
Machine hours
34,000
45,000
10,400
"96% of our customers have reported a 90% and above score. You might want to place an order with us."
