E3-1Problem 3-1: Process Costing and Job-Order CostingRequired:Which would be more appropriate in each of the followingsituations -- job-order costing or process costing?Job OrderProcessa. A custom yacht builderXb. A golf course designerXc. A potato chip manufacturerXd. A business consultantXe. A plywood manufacturerXf. A soft-drink bottlerXg. A film studioXh. A firm that supervises bridgeXconstruction projectsi. A manufacturer of custom jewelryXj. A made-to-order clothing factoryXk. A factory making one personalXcomputer modell. A fertilizer factoryX

E3-6Exercise 3-6 Schedules of Cost of Goods Manufactured and Cost of Goods SoldGiven:Parmitan Corporation has provided the following data concerning last month's manufacturingoperations.Purchases of raw materials$53,000Indirect materials included in manufacturing overhead8,000Direct labor62,000Manufacturing overhead applied to work in process41,000Underapplied overhead8,000BeginningEndingRaw materials inventory$24,000$6,000Work in process inventory41,00038,000Finished goods inventory86,00093,000Required:1. Prepare a schedule of Cost of Goods Manufactured ScheduleParmitan CorporationSchedule of Cost of Goods ManufacturedFor the month just completedDirect materials used:Raw materials inventory, beginning$24,000Add: Purchases of raw materials53,000Raw materials available for use$77,000Less: Raw materials inventory, ending(6,000)Raw materials used in production$71,000Less: Indirect materials used8,000Direct Material Used$63,000Direct labor incurred:62,000Manufacturing overhead applied41,000Total manufacturing costs added this period$166,000Beginning work-in-process41,000Total work in process$207,000Less: Work in process inventory, ending38,000Cost of goods manufactured$169,0002. Prepare an COGS statement for the just completed month.Parmitan CorporationCost of Goods Sold ScheduleFor the month just completedCost of goods sold:Finished goods inventory, beginning$86,000Add: Cost of goods manufactured169,000Cost of goods available for sale$255,000Less: Finished goods inventory, ending93,000Unadjusted cost of goods sold$162,000Add: Underapplied overhead8,000Adjusted cost of good sold$170,000

E3-16Exercise 3-16: Applying Overhead; J/Es; Disposition of Underapplied or Overapplied OverheadGiven:The following information is taken from the accounts of FasGrow Company. The entries in theT-accounts are summaries of the transaction that affected those accounts during the year.Manufacturing OverheadWork In Process Inventorya.380,000Bal.105,000b.410,000c.760,000210,000Bal.30,000115,000b.410,00080,000Finished Goods InventoryCost of Goods SoldBal.160,000d.820,000c.760,000d.820,000Bal.100,000The overhead that had been applied to production during the year is distributed among theending balances in the accounts as follow:Work in Process, ending$32,800Finished Goods, ending41,000Cost of Goods Sold336,200$410,000For example, of the $80,000 ending balance in WIP, $32,800 was overhead that had beenapplied during the year.Required:1. Identify the reasons for entries (a) through (d).(a)To record the actual MOH incurred during the current time period.(b)To record applied MOH assigned to production during the current time period.(c)To record cost of goods manufactured for the current time period.(d)To record the cost of goods sold for the current time period.2. Assume that the company closes any balance in the MOH directly to COGS.Prepare the necessary journal entry.DebitCreditManufacturing Overhead30,000Cost of Goods Sold30,000To close the Manufacturing Overhead Account3. Assume instead that the company allocates any balance in the MOH account to theother accounts in proportion to the overhead applied during the year that is in theending balance in each account. Prepare the necessary journal entry, withsupporting computations.DebitCreditManufacturing Overhead30,000Work in Process Inventory2,400Finished Goods Inventory3,000Cost of Goods Sold24,600To close the Manufacturing Overhead Account

E3-14Exercise 3-14: Varying Predetermined Overhead RatesGiven:Javadi Company makes a single product that is subject to wide seasonal variationsin demand. Javadi uses a job-order costing system and computes predeterminedoverhead rates on a quarterly basis using the number of units to be produced as theallocation base. Its estimated costs, by quarter, for the coming year are given below:QuarterFirstSecondThirdFourthDirect Materials$240,000$120,000$60,000$180,000$3.00Direct Labor96,00048,00024,00072,000$1.20Manufacturing Overhead228,000204,000192,000?$4.20See Q3Total Manufacturing Costs$564,000$372,000$276,000?$8.40Number of units to be produced80,00040,00020,00060,000200,000Estimated unit product cost$7.05$9.30$13.80?Management finds the variation in quarterly unit product costs to be confusing anddifficult to work with. It has been suggested that the problem lies with manufacturingoverhead, since it is the largest element of total manufacturing cost. Accordingly,you have been asked to find a more appropriate way of assigning manufacturingoverhead cost to units of product.Required:1. Using the high-low method, estimate the fixed manufacturing overhead cost perquarter and the variable manufacturing overhead cost per unit. Create a costformula to estimate the total manufacturing overhead cost for the fourth quarter.Compute the total manufacturing cost and unit product cost for the fourth quarter.ManufacturingDollarsUnitsHigh Values$228,00080,000Low Values192,00020,000Change in Costs$36,00060,000Variable MOH cost per unit$0.60Fixed MOH cost per quarter$180,000$180,000Cost Formula for 4th Q MOH:Y = $180,000 + $.60(4th quarter units)Y = $180,000 + $.60 (60,000) = $180,000 + $36,000 =$216,000FourthDirect Materials$180,000Direct Labor72,000Manufacturing Overhead216,000Total Manufacturing Costs$468,00060,000$7.802. What is causing the estimated unit product cost to fluctuate from one quarterto the next?The fixed portion of the MOH cost is causing the unit product costs to fluctuate.The unit product cost increases as the level of production decreases becausefixed overhead is being spread over fewer units.3. How would you recommend stabilizing the company's unit product cost?Support your answer with computations that adapt the cost formula youcreated in requirement 1.The unit product cost can be stabilized by using a predetermined overheadrate that is based on expected activity for the entire year (200,000 units).200,000The cost formula created in requirement 1 can be adapted to compute theannual predetermined overhead rate as follows:Fixed cost for the year can be estimated as 4 times the quarterlyhigh-low fixed cost value of $180,000 or $720,000.The variable portion would still be $.60 per unit produced.Therefore the cost formula would be: $720,000 + $.60(units produced)Since the yearly production is expected to be 200,000 the estimated MOHcost is expected cost is $720,000 + ($.60 X 200,000) or $720,000 + $120,000or $840,000. Thus, the stable yearly predetermined mfg. overhead would be$840,000/200,000 = $4.20 per unit produced.$4.20Stabilized Total Mfg. CostsUnit CostsDirect Materials$3.00Direct Labor1.20Total Mfg. Overhead Costs4.20*Total Mfg. Costs Per Unit$8.40*VMOH Per Unit$0.60FMOH Per Unit3.60Total Mfg. Overhead Costs$4.20

C3-29Problem 3-29: Plantwide versus Departmental MOH Rates; Under/Overapplied OverheadGiven:"Don't tell me we've lost another bid!" exclaimed Sandy Kovallas, president of Lenko Products,Inc. "I'm afraid so," replied Doug Martin, the operations vice president. "One of our competitorsunderbid us by about $10,000 on the Hastings job." "I just can't figure it out," said Kovallas. "Itseems we're either too high to get the job or too low to make any money on half the jobs we bidany more. What's happened?"Lenko Products manufactures specialized goods to customers' specifications and operates a job-order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct laborcost. The following estimates were made at the beginning of the year:DepartmentCuttingMachiningAssemblyTotal PlantManufacturing overhead$540,000$800,000$100,000$1,440,000Direct labor$300,000$200,000$400,000$900,000Jobs require varying amounts of work in the three departments. The Hastings job, forexample, would have required manufacturing costs in the three departments as follows:DepartmentCuttingMachiningAssemblyTotal PlantDirect materials$12,000$900$5,600$18,500Direct labor$6,500$1,700$13,000$21,200Manufacturing overhead????The company uses a plantwide overhead rate to apply manufacturing overhead coststo jobs.Required:1. Assuming the use of a plantwide rate:a. Calculate the MOH rate for the current yearPredetermined MOH Rate = Estimated TMOH $/ Estimated total amount of the allocation basePredetermined MOH Rate = $1,440,000 / $900,000 =$1.60160%b. Determine the amount of MOH $ that would have been applied to the Hastings job.Applied MOH = MOH Rate X Actual use of the allocation based used to the determine rateApplied MOH = $1.60 X $21,200 =$33,9202. Suppose that instead of using a plantwide overhead rate, the company had used aseparate predetermined overhead rate in each department. Under these conditions:a. Compute the MOH rate for each department for the current year.Predetermined MOH Rate = Estimated TMOH $/ Estimated total amount of the allocation baseDepartmentCuttingMachiningAssemblyTotal PlantManufacturing overhead$540,000$800,000$100,000$1,440,000Direct labor cost$300,000$200,000$400,000$900,000MOH Rate per DL $1.804.000.251.60MOH Rate as a % of DL $180%400%25%160%b. Determine the amount of MOH cost that would have been applied to the Hastings job.DepartmentCuttingMachiningAssemblyTotal PlantDirect materials$12,000$900$5,600$18,500Direct labor$6,500$1,700$13,000$21,200Manufacturing overhead$11,700$6,800$3,250$21,7503. Explain the difference between the MOH that would have been applied to the Hastingsjob using the plantwide rate in question 1 (b) above and using the departmental ratesin question 2 (b).The bulk of the labor cost on the Hastings job is in the Assembly Department, which incursvery little overhead cost. The department has an overhead rate of only 25% of direct laborcost as compared to much higher rates in the other two departments.As indicated above, use of departmental MOH overhead rates results in a much smalleramount of overhead cost charged to the Hastings job than if a plantwide rate is used.The use of a plantwide overhead rate redistributes MOH costs proportionally between thethree departments (at the rate of 160% of DL costs) and results in a larger amount of MOHcost being charged to the Hastings job, as shown in Part 1. Use of the plantwide MOH ratemay help explain why the company bid too high and lost the job.If a plantwide MOH rate is being used, the company will tend to charge too little MOH costto jobs that require a large amount of labor in the Cutting or Machining Departments. Thereason is that the plantwide overhead rate (160%) is much lower than the rates if thesedepartments were considered separately (180% and 400%).4. Assume that it is customary in the industry to bid jobs at 150% of total manufacturingcost (direct materials, direct labor, and applied MOH). What was the company's bidprice on the Hastings job? What would the bid price have been if departmental MOHrates had been used to apply MOH costs?Bid Based On Plantwide MOH RateDepartmentCuttingMachiningAssemblyTotal PlantDirect materials$12,000$900$5,600$18,500Direct labor6,5001,70013,00021,200Manufacturing overhead10,4002,72020,80033,920Total Manufacturing Costs$28,900$5,320$39,400$73,620Customary markup 50%36,810Bid price on Hastings job (TMC X 1.50)$110,430$110,430.0Bid Based On Departmental MOH RateDepartmentCuttingMachiningAssemblyTotal PlantDirect materials$12,000$900$5,600$18,500Direct labor6,5001,70013,00021,200Manufacturing overhead11,7006,8003,25021,750Total Manufacturing Costs$30,200$9,400$21,850$61,450Customary markup 50%30,725Bid price on Hastings job (TMC X 1.50)$92,175Difference in Bid price if departmental MOH rates are used$18,2555. At the end of the year, the company assembled the following actual cost data relatingto all jobs worked on during the year:Actual manufacturing costsDepartmentCuttingMachiningAssemblyTotal PlantDirect materials$760,000$90,000$410,000$1,260,000Direct labor320,000210,000340,000870,000Manufacturing overhead560,000830,00092,0001,482,0001.7034482759Total Manufacturing Costs$1,640,000$1,130,000$842,000$3,612,000AMOH RateCompute the underapplied or overapplied for the year(a) assuming that a plantwide overhead rate is usedDepartmentCuttingMachiningAssemblyTotal PlantActual MOH Incurred$560,000$830,000$92,000$1,482,000Applied MOH512,000336,000544,0001,392,000Underapplied Overhead$48,000$494,000($452,000)$90,000Check$90,000(b) assuming that departmental overhead rates are usedDepartmentCuttingMachiningAssemblyTotal PlantActual MOH Incurred$560,000$830,000$92,000$1,482,000Applied MOH576,000840,00085,0001,501,000Overapplied Overhead($16,000)($10,000)$7,000($19,000)CheckCheckCheckCheck($16,000)($10,000)$7,000($19,000)

P3A-3Problem 3A-3: Predetermined Overhead Rate and CapacityGiven:Skid Road Recording, Inc., is a small audio recording studio located in Seattle. The company handleswork for advertising agencies -- primarily for radio ads -- and has a few singers and bands as clients.Skid Road Recording handles all aspects of recording from editing to making a digital master fromwhich CDs can be copied. The competition in the audio recording industry in Seattle has always beentough, but it has been getting even tougher over the last several years. The studio has been losingcustomers to newer studios that are equipped with more-up-to-date equipment and that are able tooffer very attractive prices and excellent service. Summary data concerning the last two years ofoperations follows:20102011Estimated hours of studio services1,000750Estimated studio overhead cost$90,000$90,000Actual hours of studio service provided900600Actual studio overhead cost incurred$90,000$90,000Hours of studio service at capacity1,8001,800The company applies studio overhead to recording jobs on the basis of the hours of studio serviceprovided. For example, 30 hours of studio time were required to record, edit, and master the SlugFest music CD for a local band. All the studio overhead is fixed, and the actual overhead costincurred was exactly as estimated at the beginning of the year in both 2010 and 2011.Required:1. Skid Road Recording computes its predetermined overhead rate at the beginning of each yearbased on the estimated studio overhead and the estimated hours of studio service for the year.How much overhead would have applied to the Slug Fest job if it had been done in 2010? In2011? By how much would overhead have been underapplied or overapplied in 2010? In 2011?Predetermined overhead rate = Estimated studio overhead cost / Estimated hours of studio services20102011Predetermined rateEstimated studio overhead cost$90,000$90,000Estimated hours of studio services1,000750Predetermined overhead rate$90$120Studio time used on Slug Fest job3030Applied overhead to Slug Fest job$2,700$3,60020102011Calculation of Under/Overapplied OverheadActual hours of studio service provided900600Predetermined overhead rate$90$120Applied overhead$81,000$72,000Actual studio overhead cost incurred90,00090,000Underapplied overhead($9,000)($18,000)2. The president of Skid Road Recording has heard that some companies in the industry havechanged to a system of computing the predetermined overhead rate at the beginning of eachyear based on the estimated studio overhead for the year and the hours of studio service thatcould be provided at capacity. He would like to know what effect this method would have onjob costs. How much overhead would have been applied using this method to the Slug Festjob if it had been done in 2010? In 2011? By how much will overhead have been underappliedor overapplied in 2010 using this method? In 2011?Predetermined overhead rate = Estimated studio overhead cost / Capacity hours of studio services20102011Predetermined rateEstimated studio overhead cost$90,000$90,000Capacity hours of studio services1,8001,800Predetermined overhead rate$50$50Studio time used on Slug Fest job3030Applied overhead to Slug Fest job$1,500$1,50020102011Calculation of Under/Overapplied OverheadActual hours of studio service provided900600Predetermined overhead rate$50$50Applied overhead$45,000$30,000Actual studio overhead cost incurred90,00090,000Underapplied overhead($45,000)($60,000)3. How would you interpret the underapplied or overapplied overhead that results from using studiohours at capacity to compute the predetermined overhead rate?When the predetermined overhead rate is based on capacity, underapplied overhead isinterpreted as the cost of idle capacity. This underapplied overhead can be treated as aperiod expense that would be separately disclosed on the Income statement as Cost ofUnused Capacity.4. What fundamental business problem is Skid Road Recording facing? Which method ofdeterminimg the predetermined overhead rate is likely to be more helpful in facing this problem?Explain.Fundamental problem: competition is drawing customers awayUse of estimated hours as the predetermined overhead base can cause a death spiralLower volume causes higher cost which leads to higher prices which leads to lowervolume which leads to higher costs which leads to higher prices which leads to lowervolume, etc.Use of capacity hours as the predetermined overhead base will avoid the death spiral.Predetermined overhead rate is stable throughout.While basing the predetermined rate on capacity (rather than on estimated activity) willnot solve the company's basic problem (decreasing mkt. share), at least this methodwill be less likely to send managers misleading signals.

P3-25Problem 3-25: Comprehensive Problem -- J/Es, T-Accounts, Financial StatementsGiven:Southworth Company uses a job-order costing system and applies manufacturingcost to jobs on the basis of the cost of direct materials used in production. At thebeginning of the current year, the following estimates were made for the purposeof computing the predetermined overhead rate:EstimatedActualManufacturing overhead cost$248,000$243,000Direct materials cost$155,000$150,000MOH rate per DM $$1.60160%$1.62The following transactions took place during the year (all purchases and services wereacquired on account):a.Raw materials purchased$142,000b.Raw materials requisitioned for use in production (all DM)$150,000c.Utility bills incurred in the factory$21,000$21,000d.Costs for salaries and wages were incurred as follows:Direct labor$216,000Indirect labor$90,000$90,000Selling and Administrative Salaries$145,000e.Maintenance costs incurred in the factory$15,000$15,000f.Advertising costs incurred$130,000g.Depreciation recorded for the year$50,00090% relates to factory assets$45,000$45,00010% relates to Selling & Administrative$5,000h.Rental cost incurred on buildings$90,00080% is factory related$72,000$72,00020% is selling & administrative related$18,000i.Misc. selling & administrative costs$17,000j.Manufacturing overhead cost applied to jobs?k.Cost of goods manufactured for the year$590,000l.Sales for the year on account$1,000,000Cost of goods sold (from job cost sheets)$600,000$243,000Actual MOHInventory balances at the beginning of the yearRaw materials$18,000Work in Process$24,000Finished Goods$35,000Required:DebitCredit1. Prepare journal entries to record the above data.a.Raw Materials Inventory142,000Accounts Payable142,000To record purchase of direct materialsb.Work In Process Inventory, Job #????150,000Raw Materials Inventory150,000To record materials requisitionsc.Manufacturing Overhead21,000Accounts Payable21,000To record factory utilitiesd.Work-in-Process Inventory, Jobs #????216,000Manufacturing Overhead90,000Selling and Administrative Salaries Expense145,000Wages and Salaries Payable451,000To record payrolle.Manufacturing Overhead15,000Accounts Payable15,000To record factory maintenancef.Advertising Expense130,000Accounts Payable130,000To record advertising expense incurredg.Manufacturing Overhead45,000Depreciation Expense, Selling & Administrative5,000Accumulated Depreciation, Selling & Administrative5,000Accumulated Depreciation, Factory45,000To record depreciationh.Manufacturing Overhead72,000Rental Expense18,000Accounts Payable90,000To record cost of renti.Misc. Selling and Administrative Expense17,000Accounts Payable17,000To record misc. selling & administrative expensej.Work In Process Inventory, Job #????240,000Manufacturing Overhead240,000To record the application of MOHk.Finished Goods Inventory, Job#'s590,000Direct materials used$150,000Work In Process Inventory, Job #????590,000Direct labor incurred216,000To record completed goods transferred to FGMOH Applied240,000Total manufacturing costs added$606,000l.Accounts Receivable, Name???1,000,000BWIP24,000Sales1,000,000Total work in process$630,000To record sales on accountEWIP$40,000??Cost of goods manufactured$590,000Cost of Goods Sold600,000Finished Goods Inventory, Job#'s600,000To record cost of goods sold4. Prepare a journal entry to close any balance in the ManufacturingOverhead account to COGS.Actual MOH$243,000Dr.Applied MOH240,000Cr.m.Cost of Goods Sold3,000Underapplied$3,000Dr. Balance in MOH AccountManufacturing Overhead3,000To COGS3,000Cr. MOH; Dr. COGSTo close the Manufacturing Overhead AccountClosed$0Balance2. Post entries to T-accounts. Determine the ending balances in theinventory accounts and in the manufacturing overhead account.Raw Materials InventoryManufacturing OverheadBB18,000BB0a.142,000c.21,000b.150,000d.90,000EB10,000e.15,000g.45,000h.72,000243,000j.240,000B3,000m.3,000EB0Work In Process InventoryAccounts PayableBB24,000BB??b.150,000a.142,000d.216,000c.21,000j.240,000e.15,000k.590,000f.130,00040,000h.90,000i.17,000415,000Finished Goods InventoryWages & Salaries PayableBB35,000BB0k.590,000d.451,000l.600,00025,000Accounts ReceivableSalesBB??BB0l.1,000,000l.1,000,000Cost of Goods SoldS & A. Salaries ExpenseBB0BB0l.600,000d.145,000m.3,000603,000Advertising ExpenseDepreciation Exp., S & ABB0BB0f.130,000g.5,000Acc. Depr., Selling & Admin.Acc. Depreciation, FactoryBB0BB0g.5,000g.45,000Rental ExpenseMisc. Selling & Admin. Exp.BB0BB0h.18,000i.17,0003. Prepare a schedule of cost of goods manufacturedSouthworth CompanySchedule of Cost of Goods ManufacturedFor the Period ended on ___________Raw Material Inventory, Beginning$18,000Plus: Purchases of raw materials during period142,000Raw material available for use during period$160,000Less: Raw Material Inventory, Ending10,000Direct material used in production$150,000Direct labor incurred during period216,000Manufacturing overhead applied to work in process240,000Total Manufacturing Costs Added to Production$606,000Plus: Work-in-Process Inventory, Beginning Balance24,000Total manufacturing costs to account for$630,000Less: Work-in-Process Inventory, Ending Balance40,000Cost of Goods Manufactured$590,0004. Prepare a journal entry (J/E) to close any balance in the ManufacturingOverhead account to Cost of Goods Sold.See J/E " m." above.Prepare a schedule of cost of goods sold.Southworth CompanySchedule of Cost of Goods SoldFor the Period ended on ___________Finished Goods Inventory, beginning$35,000Plus: Cost of Goods Manufactured590,000Cost of Goods Available for Sale$625,000Less: Finished Goods Inventory, ending(25,000)Unadjusted Cost of Goods Sold$600,000Plus: Underapplied manufacturing overhead3,000Adjusted Cost of Goods Sold$603,0005. Prepare an income statement for the year.Southworth CompanyStatement of IncomeFor the Period ended on ___________Sales$1,000,000Less: Adjusted Cost of Goods Sold603,000Gross Margin$397,000Selling and Administrative Expenses:Salaries Expense$145,000Advertising Expense130,000Depreciation Expense5,000Rent Expense18,000Miscellaneous Expense17,000315,000Net Operating Income$82,0006. Job 218 was one of the many jobs started and completed during theyear. The job required $3,600 in DMs and 400 hours of DL time at arate of $11 per hour. If the job contained 500 units and the companybilled at 75% above the unit product cost on the job cost sheet, whatprice per unit would have been charged to the customer?Cost assigned to Job 218:Direct materials$3,600Direct labor4,400Applied manufacturing overhead ($1.60/DM$)5,7605,760Total manufacturing costs$13,760Add: Markup based on 75% of TMC10,320Anticipated sales billings for Job 218$24,080Divided by units produced500Price Per Unit Produced$48.16

P3B-5Problem 3B-5: Classification of Labor CostsGiven:Lynn Bjorland is employed by Southern Laboratories and is directly involved in preparingthe company's leading antibiotic drug. Lynn's basic wage rate is $24 per hour. Thecompany pays its employees time and a half for any work in excess of 40 hours perweek.Required:1. Suppose that in a given week Lynn works 45 hours. Compute Lynn's total wages forthe week. How much of this cost would the company allocate to direct labor cost? Tomanufacturing overhead?HoursRateTotalDirect labor costs45$24$1,080MOH-Overtime Premium5$1260$1,140Regular Pay40$24$960Overtime Pay5$36180$1,1402. Suppose in another week that Lynn works 50 hours but is idle for 4 hours during theweek due to equipment breakdowns. Compute Lynn's total wages for the week. Howmuch of this amount would be allocated to direct labor cost? To manufacturingoverhead?HoursRateTotalDirect labor costs46$24$1,104$1,104MOH idle time4$2496MOH overtime premium10$12120Total MOH216$1,320$1,320Regular Pay40$24$960Overtime Pay10$36360$1,3203. Southern Laboratories has an attractive package of fringe benefits that costs thecompany $8 for each hour of employee time (either regular time or overtime).During a particular week Lynn works 48 hours but is idle for 3 hours due tomaterial shortages. Compute Lynn's total wages and fringe benefits for the week.If the company treats all fringe benefits as part of manufacturing overhead cost,how much of Lynn's wages and fringe benefits for the week would be allocatedto direct labor cost? To manufacturing costs?HoursRateTotalDirect labor costs45$24$1,080$1,080MOH idle time3$24$72MOH overtime premium8$12$96MOH fringe benefits48$8384Total MOH$552$1,632$1,632Regular pay40$32$1,280Overtime pay8$44352$1,6324. Refer to the data in (3) above. If the company treats that part of fringe benefitsrelating to direct labor as added direct labor cost, how much of Lynn's wages andfringe benefits for the week will be allocated to direct labor cost? To MOH cost?HoursRateTotalDirect labor costs45$32$1,440$1,440MOH idle time3$24$72MOH fringe benefits3$824MOH overtime premium8$12$96Total MOH$192$1,632$1,632Regular pay40$32$1,280Overtime pay8$44352$1,632