Reference no: EM131583407
ErgoFurn, Inc. manufactures ergonomically designed computer furniture. ErgoFurn uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job No. Item Units Accumulated Cost CC723 Computer caddy 23,000 $930,000 CH291 Chair 18,000 431,000 PS812 Printer stand 26,000 297,000 $1,658,000 On November 30, ErgoFurn’s Raw Materials Inventory account totaled $684,000, and its Finished Goods Inventory totaled $3,493,400. ErgoFurn applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totaled $4,500,000, and the company planned to use 900,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 832,000 machine hours, total factory overhead amounted to $4,294,500, and Cost of Goods Sold was $4,284,500. ErgoFurn purchased $8,790,250 in raw materials in December and incurred the following costs for jobs in process that month: Job No. Materials Issued Machine Hours Direct Labor Hours Direct Labor Cost CC723 $155,000 17,000 14,700 $122,400 CH291 $18,800 4,400 3,600 $44,200 PS812 $219,000 20,200 14,300 $208,500 DS444 $256,000 20,000 18,500 $143,000 The following jobs were completed in December and transferred to the Finished Goods Inventory: Job No. Item Units CC723 Computer caddy 23,000 CH291 Chair 18,000 DS444 Desk 7,000 Assume that ErgoFurn sold 16,000 computer caddies, 11,200 chairs, and 4,400 desks in December. Collapse question part (a) ErgoFurn incurred $395,000 in manufacturing overhead in December. Given that expenditure, was manufacturing overhead under- or overapplied for the year? By how much? Overhead by $.