Question

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $193,000 of raw...

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $193,000 of raw materials on credit; issued materials to production of $210,000 of which $15,000 were indirect. Minstrel incurred a factory payroll of $154,000, of which $25,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $193,000 during the month, compute the amount of under- or overapplied overhead:

Multiple Choice

  • $39,000 overapplied.

  • $500 underapplied.

  • $38,000 overapplied.

  • $500 overapplied.

  • $39,000 underapplied.

    The job order cost sheets used by Greene Company revealed the following:

    Job. No. Bal., May 1 May Production Costs
    134 $ 1,750 $ 0
    135 1,250 310
    136 0 910


    Job No. 135 was completed during May and Jobs No. 134 and 135 were shipped to customers in May. What was the company's cost of goods sold for May and the balance of Work in Process inventory on May 31?

    Multiple Choice

  • $3,310; $910.

  • $3,000; $1,250.

  • $1,250; $3,000.

  • $1,750; $940.

  • $4,220; $0.

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Homework Answers

Answer #1

Q.1 Solution -

Total Labour Cost = $154,000

Out of which indirect labout = $25,000

Direct Labour Cost = $154,000 - $25,000

= $129,000

Minstrel uses a predetermined overhead application rate of 150% of direct labor cost.

Budgeted Overhead = 150% of Direct Labour Cost

= 150% of $129,000

= $193,500

Actual Overheads = $193,000

Hence it is Overhead $500 overapplied.

Q.2 Solution -

The company's cost of goods sold for May is $3,310

The balance of Work in Process inventory on May 31 is $910

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