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3. Aaron Inc. estimates direct labor costs and manufacturing overhead costs for the coming year...

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Accounting

3. Aaron Inc. estimates direct labor costs and manufacturing overhead costs for the coming year to be $800,000 and $275,000, respectively. Aaron allocates overhead costs based on direct labor hours. The estimated total labor hours and machine hours for the coming year are 16,000 hours and 10,000 hours, respectively. Job 379 has the following details: Direct Labor Cost $94,300, Direct Labor Hours 2,160, Direct Materials $61,200 and actual overhead costs for the job of $64,900. Job 379 estimates that it will have 2,500 units. The market is driving a cost for similar products at $84.00 per unit.
a. What is the predetermined overhead rate?
b. What is the total job cost for 279?
c. Is the overhead for this job over or under-allocated?
d. What are the implications of the overhead estimate in this case?
e. Can Aaron meet the market cost with current prices?

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