Question

Kansas Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows. Direct labor-hours Variable overhead costs Fixed overhead costs Total overhead 150,000 $1,050,000 612,000 $1,662,000 180,000 $1,260,000 612,000 $1,872,000 210,000 $1,470,000 612,000 $2,082,000 The expected volume is 180,000 direct labor-hours for the entire year. The following information is for March, when Jobs 6023 and 6024 were completed. $ 32,500 $161,000 $345,000 Inventories, March 1 Materials and supplies Work-in-process (Job 6023) Finished goods Purchases of materials and supplies Materials Supplies Materials and supplies requisitioned for production Job 6023 Job 6024 Job 6025 Supplies $403,000 $ 45,000 $131,000 117,500 73,500 20,000 $342,000 Factory direct labor-hours (DLH) Job 6023 Job 6024 Job 6025 12,000 DLH 9,000 DLH 7,000 DLH < Prey 2 of 2 ::: Neyt

please explain and make answers visable

Answer 1

Requirement (a)

Predetermined Overhead Rate = Total Overhead at expected direct labor hour / Total expected direct labor hour

Predetermined Overhead Rate = $1,872,000 / $180,000

Predetermined Overhead Rate = $10.40 per direct labor hour

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Requirement (b)

Opening WIP...............$161,000

Direct Materials...........$131,000

Direct Labor................$96,000 [12,000 direct labor hrs * $8 per hour]

Overhead Applied.......$108,000 [12,000 direct labor hrs * $9 per hour]

Total Cost....................$496,000

.

Requirement (c)

Applied Factory Overhead for Job 6025 = Number of Direct Labor Hours * Predetermined Overhead Rate

Applied Factory Overhead for Job 6025 = 7,000 direct labor hours * $9

Applied Factory Overhead for Job 6025 = $63,000

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Requirement (d)

Total Direct Labor Hour for all the jobs = 12,000 DLH + 9,000 DLH + 7,000 DLH

Total Direct Labor Hour for all the jobs = 28,000 DLH

Total Applied Factory Overhead = Total Number of Direct Labour Hours * Predetermined Overhead Rate

Total Applied Factory Overhead = 28,000 * $9

Total Applied Factory Overhead = $252,000

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Requirement (e)

Supplies.................................$20,000

Indirect Labor Wages.............$49,500

Supervisor Salary...................$113,000

Factory Facilities....................$20,500

Factory Equipment Cost ........$24,500

Total........................................$227,500

.

Requirement (f)

Overapplied Overhead = $0

Cost of goods sold = $2,888,000 ($2,890,000 - $2,000)

WIP Inventory = $106,000

Finished Goods Inventory = $255,000

Note -

COGS is credited by $2,000 since the amount is not material.

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