Reference no: EM133053477
Question - Cardella Pty Ltd applies overhead based on direct labour costs. The company estimates annual overhead costs will be $595,000, and annual direct labour costs will be $850,000. During February, Cardella works on two jobs: A16 and B17. Summary data concerning these jobs are as follows. Manufacturing Costs Incurred Purchased $64,000 of raw materials on account. Factory labour $86,000, plus $4,000 employer payroll taxes. Manufacturing overhead exclusive of indirect materials and indirect labour $59,800. Assignment of Costs Direct materials : Job A16 $27,000 and Job B17 $21,000 Indirect materias : $5,000 Direct Labor : Job A16 $52,000 and Job B17 $26,000 Indirect Labor : $4,000 The company completed Job A16 and sold it on account for $150,000. Job B17 was only partially completed.
Required -
a) Compute the predetermined overhead rate and describe the meaning of the result.
b) Journalize in Cardella Pty Ltd in February transactions.
c) What was the amount of under or overapplied manufacturing overhead? Describe the impact of under or overapplied.
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