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Question-1: ASDF Co. employs a job-order costing system, and it began operations on March 1. The budgeted overhead is 250,000, and the budgeted direct labor is 100,000. The actual operations for the month of March are summarized as follows:
a. Purchases of raw material, 25,000 pieces @ $1.20/piece.
b. Material and labor costs charged to production:
Job No. J-11 J-12 J-13 J-14 J-15
# Units 10,000 8,800 16,000 8,000 20,000 recpectivly.
DM Cost $4,000 3,600 7,000 3,200 8,000 recpectivly
DL Cost $6,000 5,400 9,000 4,800 3,600 recpectivly
DL Hours 3,000 2,700 4,500 2,400 1,800 recpectivly
c. Actual overhead costs incurred: Variable $18,500 Fixed 15,000
d. Completed jobs: J-11, J-12, J-13, and J-14
e. Sales-$105,000. All units produced on Jobs J-11, J-12, and J-13 were sold. Required:
Compute the following balances on March 31: a. Material inventory d. Cost of goods sold b. Work in process inventory e. Under- or overapplied overhead c. Finished goods inventory
Expert Answer
a. Material inventory = Beginning inventory + Purchases – Issues to Production = 0 + 25,000 x $ 1.20 – $ 25,800 = $ 4,200
b. Cost of Goods Sold : $ ( 17,500 + 15,750 + 27,250) = $ 60,500
| J-11 | J-12 | J-13 | |
| $ | $ | $ | |
| Direct Material | 4,000 | 3,600 | 7,000 |
| Direct Labor | 6,000 | 5,400 | 9,000 |
| Manufacturing Overhead | 7,500 | 6,750 | 11,250 |
| Cost of Goods Sold | 17,500 | 15,750 | 27,250 |
Predetermined overhead rate = Budgeted Overhead / Budgeted Direct Labor Hours = $ 250,000 / 100,000 = $ 2.50 per direct labor hour.
b. Work in Process Inventory : $ 16,100
| J-15 | |
| Direct Materials | $ 8,000 |
| Direct Labor | $ 3,600 |
| Manufacturing Overhead ( 1,800 DLH x $ 2.50) | $ 4,500 |
| Total manufacturing costs | $ 16,100 |
c. Finished Goods Inventory : $ 14,000
| J-14 | |
| Direct Materials | $ 3,200 |
| Direct Labor | $ 4,800 |
| Manufacturing Overhead ( 2,400 DLH x $ 2.50 ) | $ 6,000 |
| Total manufacturing costs | $ 14,000 |
e. Overapplied overhead : $ ( 36,000 – 33,500) = $ 2,500
Overhead applied = Total DLH x $ 2.50 = 14,400 DLH x $ 2.50 = $ 36,000
Overhead incurred = $ 18,500 + $ 15,000 = $ 33,500
