Question

yler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine-hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $246,090 and total machine hours at 63,100. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Total Direct materials used $ 10,100 $ 7,900 $ 5,500 $ 23,500 Direct labor $ 17,100 $ 5,700 $ 5,600 $ 28,400 Machine hours 1,200 hours 2,400 hours 1,200 hours 4,800 hours Job 101 was completed and sold for $50,300. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $17,720. Required: 1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.) 2. Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. (Round your intermediate calculations to 2 decimal places.) 3. Compute the balance in the Work in Process Inventory account at the end of the first month. (Round your intermediate calculations to 2 decimal places.) 4. How much gross profit would the company report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead? (Round your intermediate calculations to 2 decimal places.) 5-a. Determine the balance in the Manufacturing Overhead account at the end of the first month. (Round your intermediate calculations to 2 decimal places.) 5-b. Is it over- or underapplied?

Answer 1

1
Estimated manufacturing overhead cost	246090
Divide by Estimated machine hours	63100
Predetermined overhead rate	3.90
2
Total machine hours	4800
X Predetermined overhead rate	3.90
Total manufacturing overhead applied	18720
3
Ending work in process inventory	15780
4
Sales revenue	50300
Less: Cost of Job 101	31880
Gross Profit	18420
5a
Balance in Manufacturing overhead	1000	=18720-17720
5b
Overapplied

Workings:
	Job 101	Job 102	Job 103
Total Direct materials used	10100	7900	5500
Direct labor	17100	5700	5600
Manufacturing overhead applied	4680	9360	4680
Total cost	31880	22960	15780