Question

Part 1 Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $216,000 of raw materials on credit; issued materials to production of $210,000 of which $34,500 were indirect. Minstrel incurred a factory payroll of $159,000, paid in cash, of which $44,500 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. Minstrel's beginning and ending Work in Process Inventory are $17,000 and $30,000 respectively. Compute the cost of product transferred to Finished Goods Inventory:

Part 2 Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $203,000 of raw materials on credit; issued materials to production of $200,000 of which $25,000 were indirect. Minstrel incurred a factory payroll of $155,000, paid in cash, of which $35,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $190,000 during the month, compute the amount of under- or overapplied overhead: Please state over or under!

Answer 1

Solution: Q1 Direct Materials Used Direct Labor Manufacturing Overhead applied Total Manufacturing Costs Add : Beginning Work in Process Inventory Total Cost of Work-in-Process Inventory Less : ending Work in Process Inventory cost of product transferred to Finished Goods Inventory working $ 210000-34500 175500 159000-44500 114500 114500*150% 171750 461750 17000 478750 30000 448750 Q2 Actual Overhead cost incurred Overhead applied=(155000-35000)*150% Underapplied overhead 190000 180000 10000