Question

JOB ORDER COSTING The following cost data relate to the manufacture activities of the Aquarius Company...

JOB ORDER COSTING

The following cost data relate to the manufacture activities of the Aquarius Company during 2018:

   Manufacturing overhead costs incurred during the year:

       Property taxes               $1,500

       Utilities, factory           2,500

       Indirect labor               5,000

       Depreciation, factory           12,000

       Insurance, factory           3,000

           Total actual costs   $24,000

Other costs incurred during the year:

       Purchases of raw materials   $16,000

       Direct labor cost          20,000

Inventories:

  

   Raw materials, January 1, 2018           $ 4,000

   Raw materials, December 31, 2018             $ 3,500

   Work in Process, January 1, 2018             $ 3,000

   Work in process, December 31, 2018          $ 3,750

The company uses a predetermined overhead rate to charge overhead cost to production. The rate for 2018 was $ 5.00 per machine hour, a total of 5,000 machine hours were used for the year.

REQUIRED:

1.   Compute the amount of under or over applied overhead cost for the year 2018.

2.   Prepare a schedule of cost of goods manufactured for 2018.

Business   Accounting   
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Answer #1
1) Overhead applied = 5000*$5 = 25000
Actual overhead 24000
Overhead overapplied = 25000-24000 = 1000
2) SCHEDULE OF COST OF GOODS MANUFACTURED
WIP, January 1, 2018 3000
Direct material cost:
Beginning balance of raw materials 4000
Add: Purchases 16000
Total raw materials available 20000
Less: Ending balance of raw materials 3500
Direct materials cost 16500
Direct labor cost 20000
Overhead applied = 5000*$5 = 25000
Total cost 64500
Less: WIP, December 31. 2018 3750
Cost of goods manufactured 60750
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