Question

Molzahn Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year: Estimated total manufacturing overhead at the beginning of the year Estimated direct labor-hours at the beginning of the year $481,250 35,000 direct labor-hours Results of operations: 40,000 direct labor-hours Actual direct labor-hours Manufacturing overhead: Indirect labor cost Other manufacturing overhead costs incurred $179,000 $ 465,000 Manufacturing overhead is overapplied or underapplied by: Multiple Choice 0 $94.000 Overapplied 0 $165,000 Overapplied 0 $165,000 Underapplied 0 $94.000 Underapplied

Answer 1

1) Overhead rate = 481250/35000 = 13.75 per hour

Overhead applied = 40000*13.75 = 550000

Actual overhead = 179000+465000 = 644000

Under applied overhead = 644000-550000 = 94000

So answer is d) $94000 Under applied

2) Cost of direct material used = Beginning raw material+Purchase-Ending raw material-Indirect material

= 15000

So answer is c) $15000

3) Cost of goods manufactured = Credit amount of work in process is always equal to cost of goods manufactured = 510000

So answer is b) $510000