Question

Use below information for Questions 5 to 7:

Company X uses a job cost system and applies overhead to production on the basis of direct labor cost. On January 1, 2018, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: DM of TL27,000, DL of TL11,600, and MOH of TL15,003. As of January 1, Job 49 had been completed at a cost of TL85,007 and was part of finished goods inventory. There was a TL13,500 balance in the raw materials inventory account.

During the month of January, Company X began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were sold on account during the month for TL122,600 and TL158,070, respectively. Following additional events occurred during the month:

• Purchased additional raw materials of TL95,007 on account.
• Incurred factory labor costs of TL64,600 exclusive of payroll taxes. Payroll taxes amounted to TL16,030.
• Incurred indirect materials of TL17,000, and indirect labor of TL20,003
• Depreciation on factory equipment totalled to TL12,000
• Other factory expenses on account were TL17,000
• During the month, Company X assigned following costs to respective jobs as follows:

Assigned Costs	DM		DL
Job 50	10,000		5,700
Job 51	39,000		25,070
Job 52	30,300		20,000

Company X estimates total manufacturing overhead costs of TL887,000, direct labor costs of TL700,030 and direct labor hours 20,060 for the year.

5. Compute the balance of WIP as at January 31.
6. Compute the balance of FG as at January 31.
7. Calculate the balance of MOH account as at January 31. Use − if the MOH is underapplied. (e.g. if the account gives an overapplied balance of 100, enter 100. If the account gives an underapplied balance of 100, enter −100.)

Answer 1

Job 50 Job 51 Job 52 Job 49 TL 85,007 TL 27,000 TL 11,600 TL 15,003 Totals TL 85,007 [Finished Goods] TL 27,000 TL 11,600 TL 15,003 Beginning balance: Direct Materials Direct Labors Mfg. Overhead Current costs: Direct Materials Direct Labors Mfg. Overhead Total costs allocated Status at the end TL 10,000 TL 5,700 TL 7,222 TL 76,525 Sold TL 39,000 TL 25,070 TL 31,766 TL 95,836 Unsold TL 30,300 TL 79,300 TL 20,000 TL 50,770 TL 25,342 TL 64,330 [Ref: NOTE] TL 75,642 TL 333,010 WIP TL 85,007 Sold Balance of WIP as at January 31 Balance of FG as at January 31 Balance of MOH account as at January 31 TL 75,642 [Cost of Job 52] TL 95,836 [Cost of Job 51] -TL 1,673 [Ref: Workings]

NOTE: Job 51 52 Direct costs Gen. factory Materials Labor Total TL 10,000 TL 5,700 TL 15,700 TL 39,000 TL 25,070 TL 64,070 TL 30,300 TL 20,000 TL 50,300 TL 79,300 TL 50,770 TL 130,070 (Used for WIP] TL 17,000 TL 20,003 TL 37,003 [Used for MOH] TL 96,300 TL 70,773 TL 167,073 Job 50 51 Direct Labor Rate Applied MOH TL 5,700 126.7089% TL 7,222 (TL 5700 x 126.7089%] TL 25,070 126.7089% TL 31,766 [TL 25070 x 126.7089%] TL 20,000 126.7089% TL 25,342 [TL 20000 x 126.7089%] TL 50,770 126.7089% TL 64,330

Workings: Estimated manufacturing overhead cost TL 887,000 Estimated direct labor cost TL 700,030 Manufacturing overhead % on direct labor cost 126.7089% (TL 887000 / TL 700030) Indirect materials & indirect labor costs TL 37,003 [TL 17000 + TL 20003] Depreciation on factory equipment TL 12,000 Other factory expenses TL 17,000 Actual manufacturing overhead costs incurred TL 66,003 (TL 37003 + TL 12000+ TL 17000] Manufacturing overhead costs applied TL 64,330 [Ref: Schedule] Under-applied manufacturing overhead cost TL 1,673 [TL 66003 - TL 64330] (It is considered as under-applied MOH as applied MOH is less than actual MOH)