Reference no: EM131568007

Problem - 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 2014, the following estimates were made for the year.

	Department
	D	E	K
Manufacturing overhead	$1,065,000	$1,525,000	$852,000
Direct labor cost	$1,500,000	$1,375,000	$495,000
Direct labor hours	110,000	125,000	44,000
Machine hours	440,000	550,000	120,000

During January, the job cost sheets showed the following costs and production data.

	Department
	D	E	K
Direct materials used	$154,000	$138,600	$85,800
Direct labor cost	$132,000	$121,000	$41,250
Manufacturing overhead incurred	$108,900	$136,000	$86,900
Direct labor hours	8,800	12,100	3,850
Machine hours	37,400	49,500	10,300

(a) Compute the predetermined overhead rate for each department.

(b) Compute the total manufacturing costs assigned to jobs in January in each department.

(c) Compute the under- or overapplied overhead for each department at January 31.