1. Budgetted Overhead per labour cost =>902500/1805000 = 0.5
Actual Direct labor costs => 1582000
Actual Overheads => 903500
Applied overheads based on budget 1582000*0.5 = 791000. So Under-applied Overhead = 112500.
2. Apportionment of Under-application of Overhead:
Cost of Goods sold | 3622450 |
Finished goods | 557300 |
WIP (note below) | 1393250 |
TOTAL | 5573000 |
WIP = Direct Materials (221000+420600) + Direct Labor (110500+390600) + Manufacturing O/H (110500+390600)*0.5 = 1393250
So, Allocation:
Cost of Goods Sold | 112500*(3622450/5573000) | 73125 |
Finished Goods | 112500*(557300/5573000) | 11250 |
WIP Inventory | 112500*(1393250/5573000) | 28125 |
3. Income Statement
Sales | 6,201,300 | |
Less | ||
Adjsuted Cost of goods sold | 3622450+73125 | 3,695,575 |
Gross profiit | 2,505,725 | |
Less | ||
Operating expenses | 1,851,800 | |
Net income before taxes | 653,925 | |
Taxes | 653925*40/100 | 261,570 |
Net Income/(losses) | 392,355 |
Please comment in case of any query regarding the solution. Please do give a thumbs up.
Problem 3.34A a-c Nicole Limited is a company that produces machinery to customer orders, using a...
Nicole Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2020 was as follows: Direct labour Manufacturing overhead $1,800,000 900,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total...
Question 34 Nicole Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2020 was as follows: Direct labour $1,800,000 900,000 Manufacturing overhead As at the end of the year, two jobs were incomplete. These were 1768B,...
Nicole Limited is a company that produces machinery to customer
orders, using a normal job-order cost system. It applies
manufacturing overhead to production using a predetermined rate.
This overhead rate is set at the beginning of each fiscal year by
forecasting the year’s overhead and relating it to direct labour
costs. The budget for 2020 was as follows:
Direct labour
$1,810,000
Manufacturing overhead
905,000
As at the end of the year, two jobs were incomplete. These were
1768B, with total...
I tried multiple times and I can't get the right answers.
This is the exercise:
Nicole Limited is a company that produces machinery to customer
orders, using a normal job-order cost system. It applies
manufacturing overhead to production using a predetermined rate.
This overhead rate is set at the beginning of each fiscal year by
forecasting the year's overhead and relating it to direct labour
costs. The budget for 2020 was as follows:
Direct labour
$1,803,000
Manufacturing overhead
901,500
As...
ARKANSAS CORPORATION is a company that produces machinery to customer order. Its job costing system, using normal costing, has two direct cost categories, direct materials and direct labor, and one indirect cost pool, manufacturing overhead, allocated using a budgeted rate based on direct labor costs. Budgeted and actual information for 2019 are as follows: Budget Actual Direct Labor $210,000 $200,000 Manufacturing overhead $126,000 $ 93,420 At the end of 2019, the ending work in process consisted of: Ending Work...
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Question 8 Red Fire Inc. produces fire trucks. The company uses a normal job-order costing system to calculate its cost of goods manufactured. The company's policy is to price its job at cost plus 30% markup. On January 1, 2020, there was only one job in process, with the following costs: Job 200 $13,600 Direct materials Direct labour Applied overhead Total 18,000 27,000 $58,600 The following balances were taken from the company's general ledger as of January 1, 2020: Direct...
Glass Company makes glass orders based on the customer
specifications, so the company uses job costing to track costs.
The company uses direct labor hours as the cost driver for
manufacturing overhead application.
The company estimated the following manufacturing overhead costs
for the year: $594,500
The company estimated the following usage of direct-labor hours
for the year: $205,000
2.. Beginning Work-in-process, March 1 (Job 57) $100,000
3.. Beginning Finished Goods, March 1 (Job 55) $120,000
4.. Labor Information for March:...