Reference no: EM133148269

Question - Rivet Equipment Limited builds large pieces of robotic equipment to specific customer orders. Since each piece of equipment is different, the company prices each piece based on cost estimates of specific materials and labour that will be used. The overhead rate is based on an estimated 300,000 hours of direct labour and overhead costs of $3,375,000. In June, Rivet worked on 4 customer job orders:

Job A had 1,500 hours of direct labour

Job B had 750 hours of direct labour

Job C had 4,500 hours of direct labour

Job D had 11,690 hours of direct labour

Actual overhead for the month of June was $184,400

Required -

a. What was the effect of the activity in June on the balance in the manufacturing overhead account? Give the amount and a description of any effect you have identified.

b. Based on your results above, what next steps would you advise management to take and why?

c. Demonstrate the necessary adjustment required.