Question

Application of Overhead; Schedule of Cost of Goods Manufactured Haughton Company uses a job costing system for its production costs and a predetermined factory overhead rate based on direct labor costs to apply factory overhead to all jobs. During the month of July, the firm processed three jobs: X13, X14, and X15, of which X13 was started in June. Inventories July 1 July 31 Direct materials Work in process Finished goods 36,500 41,000 Cost of Goods Sold, July Direct materials purchased in July 55,000 Issued to production: X13 X14 X15 16,380 24,220 14,000 Factory labor-hours used ($30/hour X13 X14 X15 Indirect labor 3,500 2,800 1,600 6,900 Other factory overhead costs incurred: Rent Utility Repairs and maintenance Depreciation Other $131,500 180,600 188,500 31,100 56,000 As of July 31, Job X13 was sold and Jobs X14 and X15 were still in processing. Total factory overhead applied in July was $900,600. Required 1. Compute the predetermined factory overhead rate. 2. Compute the amount of materials inventory at the end of July. 3. Compute the actual factory overhead cost incurred during the month of July 4. Compute the ending balance of the work-in-process inventory account for July. 5. Prepare the statement cost of goods manufactured for July 6. Compute the amount of over- or underapplied overhead 7. What is the cost per unit of Job X13 if it has a total of 100 units? 8. Prepare the statement of cost of goods sold for July

Answer 1

Calculate predetermined factory overhead rate as shown below: Applied overhead is $900,600 Hourly rate is S30 Total direct labor hours used Labor Hours 3,500 2.,800 1.600 7.900 Particulars Job 13 Job 14 Job 15 Total direct labor hours Direct labor cost. Direct labor cost-Total direct labor hours x Hourly rate - 7,900 x $30 - S237,000 Predetermined factory overhead rate Direct labor cost x Overhead rate- Overhead applied $237,000 x Overhead rate $900,600 S900,600 $237,000 Overhead rate- Overhead rate $3.80 Therefore, predetermined factory overhead rate is $3.80

2. Calculate amount of materials inventory at end of July as below: Particulars Materials Inventor Amount (S) S36,500 $55,000 Add: Direct materials purchased in Less: Issued to Production K13 K14 K15 $16,380 $24,220 $14.000 $36,900 Materials Inventory at end of Therefore, materials inventory at end of July is S36,900 Calculate actual factory overhead cost incurred during month of July. Particulars Amount Indirect labor cost for (6,900 x S30) S207,000 $131,500 $180,600 $188,500 S131,100 $56,000 $894,700 Rent Repairs and maintenance eciation Other Actual factory overhead cost in Therefore, annual factory overhead cost incurred in July is $894,700

4. Calculate ending balance of the work-in-process inventory account for July as shown below: Particulars Job 14Job 15 Total S24,220 S14,000S38,220 Direct materials Direct labor cost (2,800 x S30): (1.600 x S30) Overhead: (S84,000 x $3.80): (S48,000 Work-in-process $84,000 S48,000 S132,000 x $3.80) $319 200 $182 400 $501600 S427.420 $244,400 S671,820 Therefore, ending balance of work-in-process inventory account for July is S671,820.