Question

How was the company’s performance? Should the company continue to have in house press production? Did the company accurately budget for manufacturing overhead costs? Suport your answers with relevant data. Also explain how the firm can dispose of under- or overallocated overhead costs. Name two products that would benefit from job- costing and explain.

Material Control 800 accounts payable 800 Work in process control 710 Material Control 710 100 Manufactoring overhead control Material Control 100 work in process control 1,300 wages payable 1300 900 manufactoring overhead control wages payable 900 400 manufacoring overhead control accumulated depreciation 400 manufactoring overhead control accounts payable 550 550 work in process control anufactoring overhead alLocated 2, Θ89 2,080 finished goods control 4,120 work in process control 4,120 accounts receivable 8 , Θ00 revenue 8,000 cost of goods sold 4,020 finished goods control 4,020 Manufactoring Overhead Allocate 2080 1950 Manufactoring Overhead Control cost of goods sold 130

Answer 1

The company, as far as manufacturing operations are concerned. performed well, as it ended up with a gross profit of $ 4,110 for the period. In the absence of data pertaining to selling, general and administrative expenses, comments cannot be made as to whether the company's overall performance was satisfactory or not.

Manufacturing Overhead Allocated = $ 2,080

Manufacturing Overhead incurred = $ 1,950.

Manufacturing Overhead Over-allocated = $ 2,080 - $ 1,950 = $ 130.

As there is over-allocation of manufacturing overhead by $ 130, it cannot be said the company accurately budgeted for manufacturing overhead costs. But the costs were well controlled, as the actual costs incurred were within the budgeted MOH costs.

The over-allocated MOH costs can be closed to the Cost of Goods Sold account. This would reduce the cost of goods sold.

Two products that can benefit from job costing are : a. customized furniture and b. printing of speciality textbooks.

This is because, in job costing, accounts are maintained and costing is done for each job separately. Therefore, the product cost for tailor-made products would be far more precise. If cost information is precise, pricing decisions would also be accurate,