Question

The following information applies to the questions displayed below. Stellar Sound, Inc. which uses a job-order costing system, had two jobs in process at the start of 20x1: job no. 64 ($84,100) and job no. 65 ($53,500). The following information is available: a. The company applies manufacturing overhead on the basis of machine hours (based on practical capacity). Budgeted overhead and machine activity for the year were anticipated to be $824,000, and 16,000 hours, respectively. b. The company worked on four jobs during the first quarter. Direct materials used, direct labor incurred, and machine hours consumed were as follows: Job No. 64 Direct Material $21,000 - 44,000 15,000 Direct Machine Labor Hours $35,000 1,200 22,000 700 65,000 2,000 8,800 500 65 66 c. Manufacturing overhead during the first quarter included charges for depreciation ($32,300), indirect labor ($60,200), indirect materials used ($5,200), and other factory costs ($139,700). d. Stellar Sound completed job no. 64 and job no. 65. Job no. 65 was sold on account, producing a profit of $34,800 for the firm. 5. Was manufacturing overhead under-or overapplied for the first quarter of the year? By how much? (Do not round intermediate calculations.) The overhead was underapplied for the first quarter of the year by

3. ??

4.??

5.??

Answer 1

Solution 3:

Predetermined overhead rate = $824000/ 16000 = $51.50 per machine hour

Cost of jobs in Production as of March 31 = Cost of Job 66 + cost of Job 67

= 44000+65000+(2000*51.50) + 15000+8800+(500*51.50) = $261,550

Solution 4:

The finished goods inventory increase by = Cost of Job 64 = $84100 + 21000+35000+(1200*51.50) = $201,900

Solution 5:

Applied overhead = Total machine hours used *$51.51

= (1200+700+2000+500) *$51.50 = $226,600

Actual Overhead cost = 32300+60200+5200+139700 = $237,400

The overhead was underapplied by = $237400- 226600 = $10,800