Week 2 Problem Assignment 1. Jackson uses a predetermined overhead rate. Overhead for the next twelve months is estimated to be $400,000. Jackson applies overhead as a percentage of direct labor cost. Direct labor costs are estimated to be $500,000 for the next year. During the year actual direct labor costs amounted to $520,000 and the actual overhead was as follows: Maintenance $20,000 Indirect materials $20,000 Indirect labor $90,000 Factory rent $80,000 Depreciation $110,000 Payroll taxes $80,000 Other $20,000 Total $420,000 Calculate the over/under-applied overhead for the year. 2. Arnold Company manufactured two products, A and B, during April. For purposes of product costing, an overhead rate of $2.50 per direct-labor hour was used, based on budgeted annual factory overhead of $500,000 and 200,000 budgeted annual direct-labor hours, as follows: Budgeted Overhead Budgeted Hours Department 1 $300,000 100,000 Department 2 $200,000 100,000 Total $500,000 200,000 The number of labor hours required to manufacture each of these products was: Product A Product B Department 1 3 1 Department 2 1 3 Total 4 4 During April, production units for products A and B were 1,000 and 3,000. (a) Using a plantwide overhead rate, what are total overhead costs assigned to products A and B, respectively? (b) Using departmental overhead rates, what are total overhead costs assigned to products A and B, respectively?