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 $ 900,000 684,000 $1,584,000 180,000 $1,080,000 684,000 $1,764,000 210.000 $1,260,000 684,000 $1,944,000 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. $ 31,000 $ 158,000 $341,500 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 $ 404,000 $ 43,000 $133,000 112,500 81,000 17,000 $343,500 Factory direct labor-hours (DLH) Job 6023 Job 6024 Job 6025 10,000 DLH 10,000 DLH 6,500 DLH

Answer 1

Solutions:

Solution a: Computation of Predetermined Overhead rate Total overhead / Direct labor hours 11 | 12 1764000 180000 14 Predetermined overhead rate 9.80 15 16 17 Solution b: Computation of Total Cost of Job 6023 Work in process, March 1 Add: Materials requisitioned Add: Direct labor(10000*$9) Add: Overehead cost (10000*$10) 158000 133000 90000 100000 20 21 22 Total cost of Job 6023 481000 I 24 25 26 Solution c: Factory Overhead cost applied to Job 6025 Direct labor hours of Job 6025 * Predetermined Overhead rate Factory overhead cost applied to Job 6025 28 6500 10 65000 29 30 31 32 33 Solution d: Total overhead applied to Jobs during March Total Direct labor hours (10000+10000+6500) *Predetermined Overhead rate Factory overhead cost applied to Job 6025 26500 34 10 35 265000 36 37 Sheet49 (4) Sheet49 (8) Sheet49 (7) Sheet239 She

39 40 41 Solution e: Computation of actual factory overhead incurred Supplies 17000 Indirect labor wages 52800 Supervisory salaries 109000 Factory facilities 19000 Factory Equipment costs (12000+5000+7000) 24000 43 | 44 45 46 Total actual factory overhead incurred 221800 47 48 49 50 51 52 Solution f: New Account Balances Overapplied Overhead Cost of goods sold ($3010000-$1000)* 3009000 Work in process inventory 106000 Finished goods inventory 239000 *as overapplied overhead is not material, so adjusted with only cost of goods sold 54 56 57 58 59 60 61 62 63 64 65 66 67 68 sores en esta en sus on Goog Sheet49 (4) Sheet 49 (8) Sheet49 (7) Sheet239 She