Question

Tyler 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 $194,680 and total machine hours at 62,800. 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:

Direct materials used	$	11,900		$	8,900		$	5,700		$	26,500
Direct labor	$	16,100		$	5,900		$	4,600		$	26,600
Machine hours		1,200	hours		2,000	hours		1,300	hours		4,500	hours

Job 101 was completed and sold for $51,500.
Job 102 was completed but not sold.
Job 103 is still in process.

Actual overhead costs recorded during the first month of operations totaled $13,350.

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?

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?

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. Predetermined overhead rate = Estimated total manufacturing overhead cost/Total machine hours = $194,680/62,800 = $3.10 per machine hour

2. Total manufacturing overhead applied to Work in Process Inventory account = $3.10 x 4500 hours = $13,950

3. Work in Process Inventory account balance (Job 103) = $5,700 + $4,600 + (1,300 x $3.10) = $5,700 + $4,600 + $4,030 = $14,330

4. Gross profit = Sales – Cost of goods sold

Cost of goods sold (Job 101) = $11,900 + $16,100 + (1,200 x $3.10) = $11,900 + $16,100 + $3,720 = $31,720

Gross profit = $51,500 - $31,720 = $19,780

5-a. Balance in Manufacturing Overhead account = Manufacturing overhead incurred $13,350 – Manufacturing overhead applied $13,950 = $600 credit

5-b. Over-applied