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UV Company uses a predetermined overhead rate. Overhead for the next twelve months is estimated to be $500,000. XUV applies overhead as a percentage of direct labor cost. Direct labor costs are estimated to be $750,000 for the next year.
During the year actual direct labor costs amounted to $600,000 and the actual overhead was as follows:
Maintenance $ 50,000
Indirect materials 25,000
Indirect labor 80,000
Factory rent 90,000
Depreciation 70,000
Payroll taxes 80,000
Required:
Problem 1: What is Job Order Costing and how it differ from process costing? Calculate the over/under-applied overhead for the year.
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