Question

Weeks: class z. No class 2 02/ 2010 ACC331 - Cost Accounting Chapter 4: Job Order Costing Homework Class Problem 3 The following information applies to the McDonnell Company for April production. There are only two jobs (A and B) in production in April. 1) Purchased direct materials and indirect materials with the following summary of receiving reports: Material X Material Y Indirect materials Total 12.000 3.000 2) Issued direct materials and indirect materials with this summary of requisitions: Material X Material Y Subtotal Indirect materials Total Job A $ 8,000 3,000 $ 11,000 Job B $ 16,000 8,000 $ 24,000 Total $ 24,000 11,000 $ 35,000 39,000 $ 74,000 3) Factory labor incurred is summarized by these time tickets: A S Job Job B Indirect labor Total 22,000 15.000 28,000 IS 65.000 4) Manufacturing overhead (factory utilities, factory depreciation, and factory insurance incurred) is summarized as follows: Utilities Depreciation Insurance Total $3,000 18,000 2,500 S 23.500 5) Manufacturing overhead costs were applied to jobs at the predetermined rate of $ 46 per machine hour. Job A incurred 1.100 machine hours: Job B used 800 machine hours. 6) Job A was completed: Job B was still in process at the end of April.

Answer 1

a.

Direct Material Used	$            35,000
Direct Labor	$            37,000
Manufacturing Overhead applied	$            87,400
Total Manufacturing Costs	$         159,400

Manufacturing Overhead applied = (1100+800)x$46 = $87400

b.

Actual Manufacturing Costs
Indirect Material	$            39,000
Indirect Labor	$            28,000
Utilities	$              3,000
Depreciation	$            18,000
Insurance	$              2,500
Total Actual Manufacturing Costs	$            90,500

Under (Over) Applied overhead = Actual overhead - Overhead applied
= $90500 - 87400 = $3100

Cost of Goods Sold will be increased, since overhead is underapplied