Question

Exercise JoJo Co. had the following balances and information for October Beg finished goods inventory = $18 Beg. work in process inventory = $3 Beg, raw materials inventory = $9 End, finished goods inventory = $9 End. Work in process inventory = $6 End. raw materials inventory = $15 Raw material purchases = $OU Factory wages paid = $90 Indirect materials = $b Indirect labor $21 Other overhead costs = $54 Sales = $330 Predetermined overhead rate = 200% direct materials 54 a) Cost of raw materials used equals: b) Cost of direct materials equals (RM - Ind Materials): c) Cost of direct labor equals (Factory wage - Ind Labor): d) Manufacturing overhead applied equals: e) Total manufacturing costs equal: f) Cost of goods manufactured equals: g) Cost of goods sold' equals: h) Gross profit equals: Don't worry about over or underapplied overhead Exercise At the beginning of 201X, YourCo. estimated total manufacturing overhead costs for the year of $1560 and that direct labor costs would total $3900 a) What is the predetermined overhead rate for 2018 if YourCo uses DL as its allocation base? (Calc and then enter answer.) b) Job 103 had $240 direct labor. How much overhead was applied to it? c) During 2017 Your Co's actual overhead incurred totalled $1872 and actual direct labor costs were $3510. Was factory overhead under or over applied? d) What is the amount of under or over applied factory overhead based on the data from part C?

Answer 1

Exercise 6.

a)

Particulars	Amount
Beginning raw materials inventory	$9
Add : Raw materials purchases	$60
Raw materials available for use	$69
Less : Ending raw materials inventory	$15
Cost of raw materials used	$54

b) Cost of direct materials used = Raw materials used - Indirect materials = $54 - $6 = $48

c) Cost of direct labor = Factory wages - Indirect labor = $90 - $21 = $69

d) Manufacturing overhead applied = 200% of direct materials = 200% of $48 = $96

e)

Particulars	Amount
Direct materials used	$48
Direct labor used	$69
Manufacturing overhead applied	$96
Total manufacturing costs	$213

f)

Particulars	Amount
Total manufacturing costs	$213
Add : Beginning work in process inventory	$3
Total cost of work in process	$216
Less : Ending work in process inventory	$6
Cost of goods manufactured	$210

g)

Particulars	Amount
Beginning finished goods inventory	$18
Add : Cost of goods manufactured	$210
Cost of goods available for sale	$228
Less : Ending finished goods inventory	$9
Cost of goods sold	$219

h)

Particulars	Amount
Sales	$330
Less : Cost of goods sold	$219
Gross profit	$111

Exercise 7.

a) Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct labor cost

= $1560 / $3900 X 100

= 40% of Direct labor cost

b) Applies overhead for Job 103 = $240 X 40% = $96

c) Given,

Actual overhead cost = $1872

Actual direct labor cost = $3510

==> Applied overhead = $3510 X 40% = $1404

==> Factory overhead is Underapplied

d) Factory overhead is Underapplied by $468