Question

Baker Corporation applies manufacturing overhead on the basis of direct labor-dollars. No jobs are in process at the beginning of the month. During the month the company worked on the following:

Answer 1

5 total applied OH actual OH underapplied OH 76500 80,000 3,500 B10 G11 X16 DL 35000 6000 10000 51000 DM 45000 60000 25000 130000 АО 52500 9000 15000 76500 WIP sold out 125000 257500 actual OH 80,000 total cost 132500 75000 50000 pre determined overhead rate estimated overhead / activity amount for job X16 = 15000 / 10,000 pre determined overhead rate 1.5 per DL dollor 6 journal entry debit credit COGS 2401.961 (52500 / 76500 * 3500) WIP 1098.039 (9000+15000) / 76500 * 3500 to OH 3500 as job B10 is sold, thus COGS is calculated from AO of job B10 job G11 and Job X16 are WIP, thus WIP is calculated from these jobs filling up for job B10 AO= 35000 * 1.5 DL * pre detremined OH rate 52500 7 journal entry without considering WIP and COGS direct entry COGS 3500 to OH 3500 filling up for job G11 DL= AO / pre determined OH rate 90,000 /1.5 6000 2 total cost of jobB10 DL + DM + AO 132500 3 DL of G11 as calculated above is $6000 4 DM for X16 total cost for job G11 and X16 as given is $125000 cost for job G11 is $75000 thus cost for job X16 is (125000 - 75000) total cost for job X16 is $50,000 DM is (50,000 - DL - AO) 25000

Answer 2

1.

Over head rate = Applied Overhead/Direct Labur

Considering Job X16

Over head rate = 15000/1000= 150%

2.

Direct Labor 35000

Direct Material 45000

Applied overhead 52500

Total Cost                            132500

3.

Direct labor cost = Applied Overhead/150%

Direct labor cost for Job G11 = 9000/150% = 6000

That is Direct labor cost = 6000

4.

Total inventory relates total inventories of Job G11 and X16

Hence total cost of Job G11 and X16 is 125000

So Direct Material of Job X16 is

125000-6000-60000-9000-10000-15000 = 25000

5.

Total Over head applied = 52500+9000+15000 = 76500

Actual over head cost = 80000

Under applied overhead cost = 80000-76500 = 3500

6.

Calculation of revised overhead rate on Direct labor

Total actual Overhad/ Total Direct labor

That is = 80000/51000

                = 156.86%

Increased COGS due to increase in overhead rate = Direct Labor for Job B10*(156.86%-150%)

                                                                                                = 35000*6.86%

                                                                                                = 2401

Increase in Stock due to increases overhead        = Direct labor of Job G11 and X16 *(156.86%-150%)

                                                                                                = (6000+10000)*6.86%

                                                                                                = 1099

Journal Entry                                                      Debit                                     Credit

WIP                                                                        2401

COGS                                                                    1099

Overhead                                                                                                            3500

7. Since the overhead variance is immaterial closing stock is not revalued. Total difference is adjusted to COGS. Please see the below Journal entry.

Journal Entry                                                      Debit                                     Credit

COGS                                                                    3500

Overhead                                                                                                            3500

Answer 3

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

Answer Part 1) Predetermined Overhead Rate = Overheads applied to X16/ Direct Labour of X16 = 15000 / 10000 100 = 150% Thus the correct answer is Predetermined Overhead Rate = 150% Part 2) Total cost of Job B10 = Direct Labor + Direct Material+ Overheads applied = 35000 + 45000 + (35000*150%) = 35000+45000+52500 = $ 132500 Thus the correct answer is $ 132500 Part 3) Direct Labour Cost of G11 = Applied Overheads / Predetermined Overhead Rate = 9000 / 150% = $ 6000 Thus the correct answer is $ 6000 Part 4) Direct Material cost of X16 = total cost of WIP - Cost of G11 - Cost of X16 excluding material cost = 125000-6000+60000-9000) - (10000-15000) = 125000 - 75000 - 25000 = $ 25000 Thus the correct answer is $ 25000 As per HomeworkLib policy we are required to solve the first 4 parts only. For remaining parts you have to post separate question.