Question

**Must Be Able to Complete All Questions**

A) For Eckstein Company, the predetermined overhead rate is 138% of direct labor cost. During the month, Eckstein incurred $100,000 of factory labor costs, of which $80,100 is direct labor and $19,900 is indirect labor. Actual overhead incurred was $114,538.

Compute the amount of manufacturing overhead applied during the month.

B) A job order cost sheet for Ryan Company is shown below.

Job No. 92 Direct Materials Direct Labor For 2,000 Units Manufacturing Overhead Date Beg. bal. Jan. 1 7,000 7,960 5,572) 7,960 9,200 7,360 2,900 4,000 21,160 3,200 16,132 17,860 Cost of completed job: Direct materials Direct labor Manufacturing overhead Total cost Unit cost ($55,152 + 2,000) $17,860 21,160 16,132 $55,152 $27.58

(a) On the basis of the foregoing data, answer the following questions.

(1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job?

Balance in Work in Process Inventory on January 1: $____________

(2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (Round answers to 0 decimal places, e.g. 55%.)

(B) Prepare summary entries at January 31 to record the current year’s transactions pertaining to Job No. 92

C) At May 31, 2017, the accounts of Lopez Company show the following.

1.		May 1 inventories—finished goods $ 12,900 , work in process $ 14,800 , and raw materials $ 8,900 .
2.		May 31 inventories—finished goods $ 9,700 , work in process $ 19,000 , and raw materials $ 7,400 .
3.		Debit postings to work in process were direct materials $ 64,500 , direct labor $ 52,600 , and manufacturing overhead applied $ 42,000 .
4.		Sales revenue totaled $ 216,600.

Prepare a condensed cost of goods manufactured schedule.

Answer 1

A) Manufacturing overhead applied= Direct labor*Predetermined overhead rate

= $80100*138%= $110538

B) (A) On the basis of the foregoing data, answer the following questions

(1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job?

Balance in Work in Process Inventory on January 1= Direct materials+Direct labor+Manufacturing overhead applied

= $7000+7960+5572= $20532

(2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year?

Previous year= $5572*100/7960= 70%

Current year= $7360*100/9200= 80%

(B) Prepare summary entries at January 31 to record the current year’s transactions pertaining to Job No. 92

Date	Account titles and explanation	Debit	Credit
Jan 31	Work in process ($7960+2900)	$10860
	Raw materials		$10860
	(To record raw materials used)
Jan 31	Work in process ($9200+4000)	$13200
	Factory labor		$13200
	(To record factory labor used)
Jan 31	Work in process ($7360+3200)	$10560
	Manufacturing overhead		$10560
	(To record manufacturing overhead)
Jan 31	Finished goods	$55152
	Work in process		$55152
	(To record jobs completed)

C) Prepare a condensed cost of goods manufactured schedule

LOPEZ COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2017
Work in process, May 1		$14800
Direct materials used	$64500
Direct labor	52600
Manufacturing overhead applied	42000
Total manufacturing costs		159100
Total cost of work in process		173900
Less: Work in process, May 31		-19000
Cost of goods manufactured		$154900