Question

Specifically looking for help with question #5 about Job 32. The answers shown in the Photo from my attempt are incorrect.

Pretermined Overeates, Variances, Coulos Bawyer Costume Company located in New York Owners and m anymore anym oroduces th e one Ow

Answer 1

1. Overhead rate is 175%.

2. Overapplied OH is $1,500.

3. COGM is $245,000.

4. Adjusted COGS is $208,500.

5. Total cost is $32,000.

Explanation:
1.

Computation of overhead rate is as follows:

Overhead rate = (Applied OH / DL) * 100

= ($140,000 / $80,000) * 100

= 175%

Therefore, OH rate is 175%.

2.

Computation of over-applied OH is as follows:

Overapplied OH = Applied OH - Actual OH

= $140,000 - $138,500

= $1,500

Therefore, over-applied OH is $1,500.

Note:

When applied OH is more than actual OH, then it is called over-applied overhead.

When applied OH is less than actual OH, then it is called under-applied overhead.

3.

Computation of COGM is as follows:

COGM = DM + DL + OH + WIP in beginning - WIP at end

= $40,000 + $80,000 + 140,000 + $17,000 - $32,000

= $245,000

Therefore, COGM is $245,000.

4.

Computation of adjusted COGS is as follows:

Adjusted COGS = Sales in FG - Over-applied OH

= $210,000 - $1,500

= $208,500

To record the entry for OH control account:

OH Control A/c Dr $1,500

To COGS A/c $1,500

(To record the over-applied OHs)

5.

Computation of identify all the costs is as follows:

Total cost = Direct material + Direct labor + OH applied

= $4,500 + $10,000 + $17,500

= $32,000

Therefore, total cost is $32,000.

Working notes:

Direct material = Ending WIP - Direct labor - OH applied

= $32,000 - $10,000 - $17,500

= $4,500

Direct labor = Total DL hours * Cost of each hour

= 1,000 hours * $10

= $10,000

OH applied = Direct labor * OH rate

= $10,000 * 175%

= $17,500