Reference no: EM131815688

Question- The Johnson Company applies a predetermined manufacturing overhead rate based on direct labor hours to allocate (or charge) manufacturing overhead costs to the many different production jobs it performs. For the most recent fiscal year, the company originally estimated that it would incur $750,000 in total manufacturing overhead during the year and that a total of 250,000 direct labor hours would be worked. After the year was over, the company subsequently determined it had actually incurred manufacturing overhead costs of $800,000 and 200,000 direct labor hours had been worked during the year.

Part A. What was the predetermined manufacturing overhead rate that the company originally calculated and applied to each individual production job throughout the year? Remember that the company implements this rate based upon direct labor hours, so your answer will be expressed in dollars per direct labor hour. Please show your calculation.

Part B. What was the total amount of manufacturing overhead that was applied (allocated) to all of the production jobs that were worked throughout the year? Hint: you'll need to use the answer from Part A above along with some of the other given data to help you calculate this.

Part C. At the end of the year, the company was able to calculate, after the fact, how much it had either under-allocated (under-applied) or over-allocated (over-applied) for its manufacturing overhead for the year. How much was this amount? Also, be sure to additionally specify whether this dollar amount was under-allocated or over-allocated. Hint: you'll need to use the answer from Part B along with some of the other given data to help you calculate this.