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Dobson Manufacturing Company uses a job order cost system with manufacturing overhead applied to products on the basis of direct labor dollars. At the beginning of the most recent period, the company estimated its total direct labor cost to be $50,400 and its total manufacturing overhead cost to be $85,680.
1. Calculate the predetermined overhead rate.
2. Compute over- or underapplied overhead.
3. Prepare a statement of cost of goods manufactured and sold including the adjustment for over- or underapplied overhead.
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How would accept the order affect Maui Juda's operating income? In addition to the special order's effect, what other (long-term, qualitative) factors should Maui Juda's managers consider in deciding whether to accept the order?
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