Question

A company which uses a job-costing system, had two jobs in process at the start of February 2018: Job no. J6 with a cost of $110,000 and job no. F1 with a cost of $22,000. The following information is available:

• The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $3,366,000 and 102,000 hours, respectively.
• The company worked on four jobs during February. Direct materials used, direct labor incurred, and machine hours consumed were:

Job No.

Direct Material

Direct Labor

Machine Hours

J6	152,000	118,000	1,500
F1	192,000	101,500	2,700
F2	212,000	135,000	3,000
F3	70,000	85,000	1,700

• Manufacturing overhead during February included charges for depreciation ($104,000), indirect labor ($90,000), indirect materials used ($50,000), and other factory costs ($48,000).
• Fallback completed job no. J6, job no. F1, and job no. F2. Job no. J6 was sold for cash, producing a gross profit of $142,600 for the firm. Job no. F1 was sold on account, producing a gross profit of $104,000 for the firm.

Answer and Show Work:

1. Compute the company's predetermined overhead application rate. State it in terms of cost per machine hour.

Predetermined overhead rate per machine hour:

2. Compute Total Manufacturing costs (use applied overhead – not actual overhead).

Total manufacturing costs:

3. Compute the (unadjusted) Cost of Goods Sold.

Cost of goods sold:

4. Compute the Cost of Goods Manufactured (use applied overhead – not actual overhead).

Cost of goods manufactured:

5. Compute the cost of Ending Work-in-Process Inventory (use applied overhead – not actual overhead).

Cost of Ending Work-In-Process Inventory:

6. Compute (and identify) the amount of over- or under-applied overhead.

Over- or under-applied overhead (and which one):

Answer 1

Hi

Let me know in case you face any issue: