Question

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. July 1 Inventories Direct Materials Work-in-Process Finished Goods $ 36,500 41,000 Cost of Goods Sold Direct materials purchased in July 55,000 Materials 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 Utilities Repairs and maintenance Depreciation Other $131,500 180,600 188,500 131,100 56, 000 As of July 31, Job X13 was sold and Jobs X14 and X15 were still in process. Total factory overhead applied in July was $900,600. Required: 1. Compute the predetermined factory overhead rate. 2. Compute the amount of the Direct Materials account 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 of Cost of Goods Manufactured for July 6. Compute the amount of overapplied 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

1)
Predetermined factory overhead rate = Budgeted manufacturing overhead/Budgeted direct labor cost
Predetermined factory overhead rate= $900,600/(3,500+2,800+1,600) x $30	380%
2)
Beginning Materials Inventory	$    36,500.00
Add:Total Materials Purchased in July	$    55,000.00
less: Materials Used In July	$    54,600.00
Ending Materials Inventory	$    36,900.00
3)
Indirect labour = 6900 x $30	$ 2,07,000.00
Rent	131500
Utility	$ 1,80,600.00
Repairs and maintenance	$ 1,88,500.00
Depreciation	$ 1,31,100.00
Other	$    56,000.00
Actual factory overhead cost for July	$ 8,94,700.00
4)
	Job X14	Job X15	Total
Direct Material	$    24,220.00	$      14,000.00
Direct labour	$    84,000.00	$      48,000.00
Applied manufacturing overhead	$ 3,19,200.00	$   1,82,400.00
Ending Balance WIP	$ 4,27,420.00	$   2,44,400.00	$ 6,71,820.00