Question

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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 ($53,400). 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.	Direct Material			Direct Labor			Machine Hours
64	$	21,000		$	35,000			1,200
65		—			22,000			700
66		44,000			65,000			2,000
67		15,000			8,800			500

c. Manufacturing overhead during the first quarter included charges for depreciation ($33,700), indirect labor ($60,100), indirect materials used ($5,000), and other factory costs ($139,600).

d. Stellar Sound completed job no. 64 and job no. 65. Job no. 65 was sold on account, producing a profit of $34,900 for the firm.

Required:

3. Determine the cost of jobs still in production as of March 31. (Round your answer to 2 decimal places.)

4. Did the finished-goods inventory increase or decrease during the first quarter? By how much? (Do not round intermediate calculations.)

5. Was manufacturing overhead under- or overapplied for the first quarter of the year? By how much? (Do not round intermediate calculations.)

Answer 1

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Required answer are highlighted in yellow: Solution: Format and Naming convention is not available can be slightly different per question format: Predetermined overhead rate = (824000/16000) 51.50 3) Cost of jobs still in production as of March 31: (Hrs x rate) Jobs Total DM DL МОН Job. 66 44000 65000 103000 212000 Job. 67 15000 8800 25750 49550 Total Cost of Jobs still in production 261550 4) Increase by S 201900 Calculation of amount: (84100)+(21000)+(35000)+(1200*51.50) = 201900 5) Actual Manufacturing overhead (33700+60100+5000+139600) 238400 Applied overhead (1200+700+2000+500)*51.50 226600 Underapplied manufacturing overhead 11800