Tyler Tooling Company uses a job order costing system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $203,940 and total machine hours at 61,800. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job:

Tyler Tooling Company uses a job order costing system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $203,940 and total machine hours at 61,800. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job:

 

	Job 101	Job 102	Job 103	Total
Direct materials cost	$10,700	$7,000	$4,900	$22,600
Direct labor cost	$16,500	$5,700	$5,600	$27,800
Machine hours	2,000 hours	2,800 hours	1,400 hours	6,200 hours

 

Job 101 was completed and sold for $51,400.

Job 102 was completed but not sold.

Job 103 is still in process.

Actual overhead costs recorded during the first month of operations totaled $20,960.

Requirement 1:

Calculate the predetermined overhead rate. (Round your answer to 1 decimal place. Omit the "$" sign in your response.)

 

Predetermined overhead rate

$

 

Explanation:

Predetermined overhead rate = $203,940 / 61,800 = $3.3 per machine hour

Requirement 2:

Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. (Round Predetermined overhead rate to 1 decimal place and final answer to the nearest whole dollar amount. Omit the "$" sign in your response.)

 

Total manufacturing overhead

$ 20,460

 Explanation:

Total Applied Manufacturing Overhead = 6,200 hours × $3.3 = $20,460

Requirement 3:

Compute the balance in the Work in Process Inventory account at the end of the first month. (Round Predetermined overhead rate to 1 decimal place and final answer to the nearest whole dollar amount. Omit the "$" sign in your response.)

 

Ending work in process inventory

$ 15,120

Explanation:

Ending Work in Process Inventory (Job 103) = $4,900 + $5,600 + (1,400 machine hours × $3.3) = $15,120

Requirement 4:

How much gross profit would the company report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead? (Round Predetermined overhead rate to 1 decimal place and final answer to the nearest whole dollar amount. Omit the "$" sign in your response.)

 

Gross profit

$ 17,600

 Explanation:

Cost of Job 101 = $10,700 + $16,500 + (2,000 machine hours × $3.3) = $33,800

Since this was the only job sold, the gross profit before the adjustment for over or underapplied manufacturing overhead is $51,400 – $33,800 = $17,600.

Requirement 5:

Determine the balance in the Manufacturing Overhead account at the end of the first month. Is it over- or underapplied? (Round Predetermined overhead rate to 1 decimal place and final answer to the nearest whole dollar amount. Input the amount as positive value. Omit the "$" sign in your response.)

 

Balance

Underapplied  $ 500

Explanation:

Manufacturing Overhead

Actual	20,960		Applied	20,460
Balance (Underapplied)	500