Question

3. Bakerston Company is a manufacturing firm that uses job-order costing. The company's inventory balances were...

3. Bakerston Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year: raw materials beginning balance $14,000 ending $22,000 WIP beginning $27,000 ending $9,000 finished goods beg $62,000 ending $77,000 • Raw materials were purchased, $315,000 (there were no Indirect Materials at this company). • The following employee costs were incurred: direct labor, $377,000; indirect labor, $96,000; and administrative salaries, $172,000. • Selling costs, $147,000. • Factory utility costs, $10,000. • Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. • Manufacturing overhead was applied to jobs. The actual level of activity for the year was 31,816 machine-hours. (Hint: you must calculate the predetermined overhead rate per machine hours and use it to apply overhead). Required (3 Points): a. Prepare a schedule of cost of goods manufactured. b. Calculate Cost of Goods Sold (do not close the over- or under-applied Mfg. Overhead). c. Was the overhead underapplied or overapplied? By how much?

Homework Answers

Answer #1

Predetermine overhead rate = 231000/33000 = 7 per machine hour

a. Prepare a schedule of cost of goods manufactured

Beginning work in process 27000
Beginning raw material 14000
Raw material purchase 315000
Less; Ending raw material -22000
Direct material used 307000
Direct labour 377000
Manufacturing overhead (31816*7) 222712
Total manufacturing cost 906712
Total cost of work in process 933712
Less: Ending work in process -9000
Cost of goods manufactured 924712

b. Calculate Cost of Goods Sold (do not close the over- or under-applied Mfg. Overhead).

Cost of goods sold = 62000+924712-77000 = 909712

c. Was the overhead underapplied or overapplied? By how much?

Overhead applied = 31816*7 = 222712

Actual overhead = 96000+10000+120000 = 226000

Under applied overhead = 3288

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as...
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials $ 14,600 $ 22,600 Work in process $ 27,600 $ 9,600 Finished Goods $ 62,600 $ 77,600 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,600 machine-hours and incur $275,520...
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as...
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials $ 14,450​ $ 22,450​ Work in process $ 27,450​ $ 9450​ Finished Goods $ 62,450​ $ 77,450​ The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,450 machine-hours and incur $264,255...
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as...
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials $ 14,950​ $ 22,950​ Work in process $ 27,950​ $ 9950​ Finished Goods $ 62,950​ $ 77,950​ The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,950 machine-hours and incur $302,155...
New Junior Company is a manufacturing firm that uses Job-Order costing system. On January 1, the...
New Junior Company is a manufacturing firm that uses Job-Order costing system. On January 1, the beginning of the current year, the company’s inventory balances were as follows: Raw materials $13’700 Work in process 44’000 Finished goods 32’400 The company applies cost to jobs on the basis of machine hours. For the current year, the company estimated that it would work 32’500 machine hours and incur $151’000 in manufacturing overhead costs. The following transactions were recorded for the year: a....
Happy Company is a manufacturing firm that uses job-order costing. At the beginning of the year,...
Happy Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's account balances were as follows: Cash 1,045,000 Accounts Receivable 8,000 RM Inventory 26,000 WIP Inventory 21,000 FG Inventory 39,000 Supplies 8,000 Prepaid Insurance 3,000 Equipment 528,000 Accumulated Depreciation-Equipment 48,000 Accounts Payable 26,000 Common Stock, par $10 1,500,000 Retained Earnings 104,000 Total 1,678,000 1,678,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the...
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances...
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows: Raw materials $ 50,000 Work in process $ 30,800 Finished goods $ 43,200 The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $12.00 per direct labor-hour was based on a cost formula that estimated $480,000 of total manufacturing overhead for an estimated activity level of 40,000 direct...
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances...
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows: Raw materials $ 40,000 Work in process $ 18,000 Finished goods $ 35,000 The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $16.25 per direct labor-hour was based on a cost formula that estimated $650,000 of total manufacturing overhead for an estimated activity level of 40,000 direct...
Villanova Corporation is a diversified manufacturer of industrial goods that uses a job-order costing system. The...
Villanova Corporation is a diversified manufacturer of industrial goods that uses a job-order costing system. The company utilizes a predetermined overhead rate of $30 per machine-hour. Manufacturing overhead cost was applied to production on the basis of 18,000 machine-hours actually worked during 2019. Cost data have been supplied for the manufacturing activities during 2019: Inventories: Raw materials, beginning $10,000 Raw materials, ending $60,000 Work in process, beginning $50,000 Work in process, ending $60,000 Manufacturing overhead costs incurred: Indirect materials $...
Villanova Corporation is a diversified manufacturer of industrial goods that uses a job-order costing system. The...
Villanova Corporation is a diversified manufacturer of industrial goods that uses a job-order costing system. The company utilizes a predetermined overhead rate of $30 per machine-hour. Manufacturing overhead cost was applied to production on the basis of 18,000 machine-hours actually worked during 2019. Cost data have been supplied for the manufacturing activities during 2019: Inventories: Raw materials, beginning $10,000 Raw materials, ending $60,000 Work in process, beginning $50,000 Work in process, ending $60,000 Manufacturing overhead costs incurred: Indirect materials $...
URGENT PoMA Limited is a manufacturer that uses job-order costing. The following data relating to its...
URGENT PoMA Limited is a manufacturer that uses job-order costing. The following data relating to its inventory balances is available for the year:                                             Beginning balance Ending balance Raw materials $22,000 $25,000 Work in process $52,000 $34,000 Finished goods $121,000 $136,000 Overhead is applied using a predetermined overhead rate based on machine-hours. The company budgeted a total of 40,000 machine hours for the year and an estimated manufacturing overhead cost of $200,000. The following transactions were recorded for the year:                                                                 1....