Question

Required information (The following information applies to the questions displayed below.) Garcia, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The company applies manufacturing overhead using machine hours in the Machining Department and direct-labor cost in the Assembly Department. The following information relates to the year just ended: Machining Assembly Department Department Budgeted manufacturing $4,000,000 $3,136,000 overhead Actual manufacturing overhead 4,270,000 3,050,000 Budgeted direct-labor cost (based on practical capacity) 1,500,000 5,600,000 Actual direct-labor cost 1,450,000 5,780,000 Budgeted machine hours (based on practical capacity) 400,000 100,000 Actual machine hours 425,000 110,000 The data that follow pertain to job no. 775, the only job in production at year-end. Direct material Direct labor Machine hours Machining Assembly Department Department $25,500 $ 6,700 $ 27,700 $58,600 370 150 Selling and administrative expense amounted to $2,500,000.

Answer 1

Solution 2:

Computation of overhead rate for Each department
Particulars	Machining	Assembly
Budgeted Manufacturing Overhead	$40,00,000	$31,36,000
/Budgeted Machine hours	400000
/Budgeted direct labor Cost		$56,00,000
Overhead rate of department	$10	56%

Cost of Year end Work in process inventory (Job no. 775)
Direct materials (25500+6700)	32200
Direct labor (27700+58600)	86300
Overhead applied [(370*$10) +($58600*56%)	36516
Total Cost	155016

Solution 3:

Computation of Under/Over applied Overhead
Machining Department
Actual Machine Hours	425000
Overhead rate of department	$10
Manufacturing overhead applied	$42,50,000
Actual Overhead incurred	$42,70,000
Underapplied Overhead	$20,000

Solution 4:

Computation of Under/Over applied Overhead
Assembly Department
Actual Direct labor Cost	5780000
Overhead rate of department	56%
Manufacturing overhead applied	$32,36,800
Actual Overhead incurred	$30,50,000
Overapplied Overhead	$1,86,800

Solution 6:

Overhead charged to Work in process Account
Machining Department (Applied Overhead)	$42,50,000
Assembly Department (Applied Overhead)	$32,36,800
Overhead charged to Work in process	$74,86,800