Question

1. Carrothers Company estimates that total factory overhead costs will be $960,000 for the year. Direct labor hours are estimated to be 80,000.

a. For Carrothers Company, determine the predetermined factory overhead rate using direct labor hours as the activity base.
___________ per direct labor hour

b. During August, Carrothers Company accumulated 4,300 hours of direct labor costs on Job 50 and 5,100 hours on Job 56. Determine the amount of factory overhead applied to Jobs 50 and 56 in August.

2. At the end of May, Lockmiller Company had completed Jobs 275 and 310. Job 275 is for 5,000 units, and Job 310 is for 2,000 units.

The following data relate to these two jobs:

On May 7, Lockmiller Company purchased on account 12,000 units of materials at $6 per unit. During May, raw materials were requisitioned for production as follows: 8,400 units for Job 275 at $6 per unit and 2,150 units for Job 310 at $4 per unit.

During May, Lockmiller Company accumulated 1,900 hours of direct labor costs on Job 275 and 2,600 hours on Job 310. The total direct labor was incurred at a rate of $34 per direct labor hour for Job 275 and $26 per direct labor hour for Job 310.

Lockmiller Company estimates that total factory overhead costs will be $867,000 for the year. Direct labor hours are estimated to be 102,000.

a. Determine the balance on the job cost sheets for Jobs 275 and 310 at the end of May.

Job 275
Job 310

b. Determine the cost per unit for Jobs 275 and 310 at the end of May. If required, round your answers to two decimal places.

Job 275
Job 310	_____________

c. Journalize the entry to apply factory overhead to both jobs in August according to the predetermined overhead rate. If an amount box does not require an entry, leave it blank.

3. A summary of the time tickets for the current month follows:

Job No.	Amount
100	$7,800
101	11,900
104	27,100
108	18,600
Indirect	8,500
111	4,400
115	3,200
117	15,800

Journalize the entry to record the factory labor costs. If an amount box does not require an entry, leave it blank.

4. Entries for Direct Labor and Factory Overhead

Townsend Industries Inc. manufactures recreational vehicles. Townsend uses a job order cost system. The time tickets from November jobs are summarized as follows:

Job 201	$6,240
Job 202	7,000
Job 203	5,210
Job 204	6,750
Factory supervision	4,000

Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $18 per direct labor hour. The direct labor rate is $40 per hour.

a. Journalize the entry to record the factory labor costs. If an amount box does not require an entry, leave it blank.

b. Journalize the entry to apply factory overhead to production for November. If an amount box does not require an entry, leave it blank.

Answer 1

1.
a. Overhead rate = $960000 / 80000 = $12 per DLH

b. Overhead applied
Job 50 = 4300 x $12 = $51600
Job 56 = 5100 x $12 = $61200

2.

		Job 275	Job 310
	Beg Bal	$                  -	$                 -
	Direct Material	$         50,400	$           8,600
	Direct Labor	$         64,600	$         67,600
	Overhead	$         16,150	$         22,100
a	Total Cost	$       131,150	$        98,300
	Units	5000	2000
b	Unit Cost	$           26.23	$           49.15

Overhead rate = $867000/102000 = $8.5 per DLH

c.

Account Titles	Debit	Credit
Work in process Inventory	$           38,250
Manufacturing Overhead		$           38,250

3.

Account Titles	Debit	Credit
Work in process Inventory	$           88,800
Manufacturing Overhead	$             8,500
Wages Payable / Factory Payroll		$           97,300

4.
a.

Account Titles	Debit	Credit
Work in process Inventory	$           25,200
Manufacturing Overhead	$             4,000
Wages Payable / Factory Payroll		$           29,200

b.

Account Titles	Debit	Credit
Work in process Inventory	$           11,340
Manufacturing Overhead		$           11,340

Overhead applied = $25200 / 40 x 18 = $11340