Question

7) Molzahn Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year: Estimated total manufacturing overhead at the beginning 5481,250 of the year Estimated direct labor-hours at the beginning of the year 35.000 direct labor hours Results of operations: Actual direct labor-hours 40,000 direct labor-hours Manufacturing overhead: Indirect labor cost $179.000 Other manufacturing overhead costs incurred 5465,000 Manufacturing overhead is overapplied or underapplied by: A) $165,000 Overapplied B) $94,000 Underapplied C) $165,000 Underapplied D) $94,000 Overapplied 8) Dipaola Corporation has provided the following data concerning last month's operations. Purchases of raw materials 26,00d Indirect materials included in manufacturing overheads 6,000 Direct labor cost $68,000 Manufacturing overhead applied to Work in Process 57.000 Overapplied overhead 6,000 Beginning Ending Raw materials inventory s 12,000 18,000| Work in process inventory s 46,000 1554,000|| Finished goods inventory 5 31,000 $46,000| How much is the direct materials cost for the month on the Schedule of Cost of Goods Manufactured? A) $38,000 B) $32,000 C) $14,000 D) $26,000

Answer 1

7)

Estimated total manufacturing overhead at the beginning of the year	481250
(/) Estimated direct labor-hours at the beginning of the year	35000
Predetermined overhead rate	13.75
(*) Actual direct labor-hours	40000
Manufacturing overhead applied	550000
Actual manufacturng overhead [ 179000 + 465000 ]	644000
As the Manufacturing overhead applied are less than the actual manufacturing overhead, the overheads are underapplied by 94000
Answer : Option B [ $94,000 underapplied ]

8)

Beginning raw materials inventory	12000
(+) Purchases of raw materials	26000
(-) Indirect materials	6000
(-) Ending raw materials inventory	18000
Direct materials cost for the month	14000	Option C