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The Pendley Company uses a normal job cost order system.....

units. During the year, the compall) expenses: Indirect labor.. $,000 Indirect materials (supplies).. 4,000 Depreciation-plant and equipment... 3,000 Insurance-plan... 2 Property taxe Utilities 2,000 3,000 5,000 Required: (1) Calculate the predetermined overhead rate. (2) Prepare journal entries for manufacturing overhead. (3) Close any under- or overapplied overhead to cost of goods sold 5-19 Computation o f Under- or Overapplied Overhead he Pendley Company uses a normal job order cost system. Manufacturing overhead is applied at $2 per direct labor hour. The results of operation for the current period are Direct labor cost (100,000 hours @ $6.00) $600,000 50,000 .400,000 40,000 Utilities used in factory. 100,000 Indirect supplies used. Cost of goods sold.800,000 100,000 Finished goods (ending) The company has no beginning inventory in work-in-process or fini shed goods. Required (1) Determine the amount of under- or overapplied overhead for th (2) Compute the ending inventory in work-in-process eperiod.

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1 Under applied overhead-S10,000 2 Ending Inventory Work in process - S310,000 Working Notes: Pendley Company Cost of goods Manufactured Schedule Direct Materials used Direct Labour cost Manufacturing overhead applied Total Manufacturing Costs Add: Work in process inventory Beginning Less: work in process inventory Ending Cost of goods Manufactured S 400,000 S 600,000 S 200,000 S 1,200,000 S 310,000 S 890.000 Manufacturing overhead applied 100,000*$2 S200,000 Pendley Companv Cost of goods Sold Finished goods inventory, beginning Add: Cost of Goods manufactured Cost of goods available for sale Less: Finished goods inventory, ending Unadjusted cost of goods sold Add: Under applied overhead Cost of goods sold S 890,000 S 890,000 S 100,000 S 790,000 S10,000 $ 800,000Note: Under Applied Overhead Actual manufacturing overhaed cost -Manufacturing overhead applied to work in process - $210,000-$200,000- $10,000 Actuval Manufacturing Overhead Indirect Labor Indirect supplies used Utilities supplies used in factory Miscelleniou Actuval Manufacturing Overhead S 50,000 s 40,000 S 100,000 S20.000 S 210,000 is Overhead

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