Sheridan Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K. In establishing the predetermined overhead rates for 2022, the following estimates were made for the year.
Department
D E K
Manufacturing overhead $ 1,048,800 $ 1,610,000 $ 828,000
Direct labor costs $ 1,380,000 $ 1,150,000 $ 414,000
Direct labor hours 92,000 115,000 36,800
Machine hours 368,000 460,000 110,400
The following information pertains to January 2022 for each manufacturing department.
Department
D E K
Direct materials used $ 128,800 $ 115,920 $ 71,760
Direct labor costs $ 110,400 $ 101,200 $ 34,500
Manufacturing overhead
incurred $ 91,080 $ 114,080 $ 72,680
Direct labor hours 7,360 10,120 3,220
Machine hours 31,280 41,400 9,568
1. Compute the predetermined overhead rate for each department.
2. Compute the total manufacturing costs assigned to jobs in January in each department.
3. Compute the under- or overapplied overhead for each department at January 31.