Question

1. Direct materials requisitioned during the month:
Job 101 $22,000
Job 102 16,000
Job 103 24,000
$62,000


2. Direct labor incurred and charged to jobs during the month was:
Job 101 $30,000
Job 102 35,000
Job 103 20,000
$85,000

3. Manufacturing overhead was applied to jobs worked on using a
predetermined overhead rate based on 80% of direct labor costs.

4. Actual manufacturing overhead costs incurred during the month amounted
to $74,000.

5. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were
completed during the month.

Instructions:
(a) Prepare journal entries to record the above transactions.
(b) Answer the following questions:

1. How much manufacturing overhead was applied to Job 103
during the month?

2. Compute the unit cost of Jobs 101 and 103.

3. What is the balance in Work In Process Inventory at the end of
the month?

4. Determine if manufacturing overhead was under- or overapplied
during the month. How much?

Answer 1

a). Journal entries:Calculation of the cost of finished jobs:

Job	Direct material	Direct labor	Factory overhead	Total
101	22,000	30,000	24000	76,000
103	24,000	20,000	16000	60,000
Total	46,000	50,000	40000	136,000

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b).1. Manufacturing overhead applied to job 103 during the month = $60,000

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2. Unit costs:

Job	Total cost	Total units	Cost per unit
101	76,000	1,000	76
103	60,000	200	300

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3. Balance in works in process:= Works in process - finished goods= (62,000 + 85,000 + 68,000) - 136,000= 215,000 - 136,000= $79,000

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4.Actual manufacturing overhead = $74,000Applied manufacturing overhead = 68,000Underapplied manufacturing overhead = $6,000