Question

# Johnson Inc. is a job-order manufacturing company that uses a predetermined overhead rate based on direct...

 Johnson Inc. is a job-order manufacturing company that uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 93,000 and estimated factory overhead is \$511,500. The following information is for September of the current year. Job A was completed during September, and Job B was started but not finished

September 1, inventories

Materials inventory \$ 8,400

Work-in-process inventory (All Job A) 33,000

Finished goods inventory 71,500

Material purchases 117,500

Direct materials requisitioned       Job A 74,000    Job B 38,000

Direct labor hours      Job A 5,100     Job B 4,400

Labor costs incurred

Direct labor (\$7.50/hour) 71,250

Indirect labor 14,400

Supervisory salaries 6,900

Rental costs

Factory 7,900

Total equipment depreciation costs

Factory 8,850

Indirect materials used 12,900

 1.What is the total cost of Job A? 2.What is the total factory overhead applied during September?
 3 What is the overapplied or underapplied overhead for September?

Solution

=\$511,500/93,000

=\$5.5 per direct labour hour

1.

Total cost of job A:

Direct material =\$74,000

Direct labour (\$7.50×5100)=\$38,250

Work in process=\$33,000

Total cost=\$173,300

2.

Total factory overhead applied during September:

=(5100+4400)direct labour hour×\$5.50

=\$52,250

3.

Indirect labour=\$14,400

Supervisors salary=\$6,900

Rental costs factory=\$7,900

Equipment depreciation factory=\$8,850

Indirect material=\$12,900

=\$52,250-\$50,950

=\$1,300

#### Earn Coins

Coins can be redeemed for fabulous gifts.