Question

Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 120% of direct labor cost. Selected data concerning the past year's operation of the company are presented below.

		January 1		December 31
	Direct materials	$	94,000	$	57,000
	Work in process		83,000		59,000
	Finished goods		132,000		117,000
	Other information
	Direct materials purchases			$	341,000
	Cost of goods available for sale				930,000
	Actual factory overhead costs				277,000

The amount of underapplied or overapplied overhead is:

Answer 1

	Beginning Direct Material	94000
	Direct Material Purchases	341000
	Ending Direct Material	-57000
	Direct Material Used	378000
	Cost of Goods available for sale	930000
	Finished Goods Beginning Inventory	-132000
	Cost of Goods Manufactured	798000
	Cost of Goods Manufactured	798000
	Ending WIP	59000
	Beginning WIP	-83000
	Direct Material Used	-378000
	Direct Labor + Applied Overhead	396000
A	Direct Labor + Applied Overhead	396000
B	Factory Overhead Cost [396000 / 220%]	180000
C = A - B	Applied Overhead	216000
D	Actual Overhead	277000
	Overheads are	Under-Applied
E = D - C	Under Applied by	61000

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