Question

Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $214,540 and total machine hours at 63,100. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Direct materials used Direct labor Machine hours Job 101 Job 102 Job 103 Total $10,700 $ 7,000 $5,400 $ 23,100 $ 17,900 $ 6,700 $ 4,500 $29,100 1,300 hours 2,000 hours 600 hours 3,900 hours Job 101 was completed and sold for $51,900. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $12,560. Required: 1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.) 2. Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. (Round your intermediate calculations to 2 decimal places.) 3. Compute the balance in the Work in Process Inventory account at the end of the first month. (Round your intermediate calculations to 2 decimal places.) 4. How much gross profit would the company report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead? (Round your intermediate calculations to 2 decimal places.) 5-a. Determine the balance in the Manufacturing Overhead account at the end of the first month. (Round your intermediate calculations to 2 decimal places.) 5-b. Is it over- or underapplied? per Machine Hour 2. Predetermined Overhead Rate Total Applied Manufacturing Overhead Ending Work in Process Inventory 3.

Answer 1

1) Predetermine overhead rate = 214540/63100 = 3.40 per machine hour

2) Total applied manufacturing overhead = 3900*3.4 = 13260

3) Ending work in process

	Job 103
Direct material	5400
Direct labor	4500
Manufacturing overhead (600*3.4)	2040
Total work in process	11940

4) Cost of goods sold

	Job 101
Direct material	10700
Direct labor	17900
Manufacturing overhead (1300*3.4)	4420
Total work in process	33020

Gross profit = 51900-33020 = 18880

5a) Applied overhead = 13260

Actual overhead = 12560

Balance = 13260-12560 = 700

5b) Over applied overhead