Brooks Foundry in Rochester comma New York, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following:Manufacturing overhead costs . . . . . . . . $ 840,000
Direct labor costs . . . . . . . . . . . . . . . . . . 1,550,000
Machine hours . . . . . . . . . . . . . . . . . . 70,000 hours
At the end of 2012, the company had actually incurred:
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,160,000
Depreciation on manufacturing property,
plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Property taxes on plant . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Sales salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,500
Delivery drivers’ wages . . . . . . . . . . . . . . . . . . . . . . . . 23,500
Plant janitor’s wages . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,000 hour
Requirements 1. Compute Brooks' predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to jobs during the year? 3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much? 4. Were the jobs overcosted or undercosted? By how much?