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Question: Sino-woodworks Ethiopia Ltd makes office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine-hours, and the rate in the Fabrication Department is based on direct materials cost. At the beginning of the year, the company's management made the following estimates for the year: Job-C was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:
Required: a) Compute the predetermined overhead rate used during the year in the Preparation and Fabrication Departments.
b) Compute the total overhead cost applied to Job-C.
c) What would be the total cost recorded for Job-C? If the job contained 25 units, what would be the unit product cost?
d) At the end of the year, the records of the company revealed the following actual cost and operating data for all jobs worked on during the year: What was the amount of under-applied or over-applied overhead in each department at the end of the year?
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