Problem 2A-4A Waterway Company uses a job order cost system in each of its threemanufacturing departments. Manufacturing overhead is applied tojobs on the basis of direct labor cost in Department D, directlabor hours in Department E, and machine hours in DepartmentK.
In establishing the predetermined overhead rates for 2020, thefollowing estimates were made for the year.
| | Department | | | D | | E | | K | Manufacturing overhead | | $ 1,197,000 | | $ 1,500,000 | | $ 720,000 | Direct labor costs | | $ 1,496,250 | | $ 1,250,000 | | $ 450,000 | Direct labor hours | | 100,000 | | 125,000 | | 40,000 | Machine hours | | 400,000 | | 500,000 | | 120,000 |
During January, the job cost sheets showed the following costs andproduction data.
| | Department | | | D | | E | | K | Direct materials used | | $ 140,000 | | $ 126,000 | | $ 78,000 | Direct labor costs | | $ 120,000 | | $ 110,000 | | $ 37,500 | Manufacturing overhead incurred | | $ 99,000 | | $ 124,000 | | $ 79,000 | Direct labor hours | | 8,000 | | 11,000 | | 3,500 | Machine hours | | 34,000 | | 45,000 | | 10,450 |
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