Friday, December 19, 2014



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Cox Company uses a job-order cost system and assigns overhead cost to jobs on a basis of direct labor hours.  Manufacturing overhead cost and direct labor hours were estimated at $120,000 and 40,000 hours, respectively, for 2011.  In July 2011, Job #334 was completed at a cost of $10,000 in direct materials and $12,000 in direct labor.  The labor rate is $20 per hour.  By the end of 2011, Cox Company reported actual work of 38,000 direct labor hours and had incurred $109,000 in actual manufacturing overhead cost.
Calculate the total per unit cost of Job #334 which contained 50 units.
Calculate Cox’s under or overapplied overhead for 2011.
Describe what is causing the under or overapplied overhead.