Exam 3: Systems Design: Job-Order Costing

(Appendix 3A)If the predetermined overhead rate is based on the estimated total amount of the allocation base at capacity,it is more likely that overhead will be underapplied than overapplied.

Mallet Company has only Job 844 in process on March 1 of the current year. The job has been charged with $2,000 of direct material cost, $2,500 of direct labour cost, and $1,750 of manufacturing overhead cost. The company assigns overhead cost to jobs at a predetermined rate of 70% of direct labour cost. Any under- or overapplied overhead cost is closed out to Cost of Goods Sold at the end of the month. During March, the following activity and amounts were recorded by the company: Raw materials (all direct materials): Purchased during the month $\quad$$\quad$$\quad$$\$ 29,500$ Used in production $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\$ 30,500$ Labour: Direct labour hours worked during the month 2,500 Direct labour cost incurred \ 26,500 Indirect labour costs incurred \ 5,500 Manufacturing overhead costs incurred (total) $\quad$$\quad$$\quad$$\$ 18,500$ Inventories: Raw materials (all direct) March 31 $\quad$$\quad$$\quad$$\$ 7,500$ Work in Process, March 31 $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\$ 14,500$ Work in Process inventory contains $5,500 of direct labour cost. -What is the cost of goods manufactured for March?

The following journal entry would be made to apply overhead cost to jobs in a job-order costing system: Work in Process Manufacturing Overhead

Sai Company uses a job order cost system and applies manufacturing overhead costs to jobs using a predetermined overhead rate based on direct labour-hours. The following data were extracted from the company's accounting records for Year 6 Estimated Actual Manufacturing overhead costs \ 50,000 \ 54,000 Direct labour-hours 20,000 hours 24,000 hours Job #461 was completed during the year and the following costs had been incurred on that job: Direct materials \ 50,000 Direct labour \ 1,500 (at \ 5.00 per direct labour hour) -What was the under applied or over applied overhead for the year?

What was the amount of direct materials used during November if $20,000 in raw materials were purchased during the month and if the inventories were as follows? Balance Balance November 1 November 30 Raw materials \ 4,000 \ 3,000 Work in process \ 12,000 \ 15,000 Finished oonds \ 24,000 \ 27000

The following partially completed T-accounts summarize last year's transactions for Kelshaw Company: $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Raw Materials }$ Beg Bal 4,000 20,000 (2) (1) 18,000 $\quad$$\quad$$\quad$$\quad$$\quad$$\text { Work in Process }$ Beg Bal 8,000 50,000 (7) (2) 12,000 (4) 15,000 (6) 28,000 $\quad$$\text { Manufacturing Overhead }$ (2) 8,000 28,000 (6) (3) 12,000 (4) 5,000 (5) 4,000 $\text { Cost of Goods Sold }$ At the end of the year, the company closes out the balance in the Manufacturing Overhead account to Cost of Goods Sold. -What is the cost of goods sold (after adjustment for under- or over applied overhead)?

Dowan Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs.Last year,Dowan Company incurred $156,600 in actual manufacturing overhead cost.The Manufacturing Overhead account showed that overhead was underapplied by $12,600 for the year.If the predetermined overhead rate is $6.00 per direct labour-hour,how many hours did the company work during the year?

The information below has been taken from the cost records of Tercel Company for the past year: Raw materials used in production (all direct) \ 326,000 Total manufacturing costs charged to jobs during the year (includes raw materials, direct labour, and manufacturing overhead applied at the rate of 60 \% of direct labour cost) \ 686,000 Cost of goods available for sale \ 826,000 Selling and administrative expenses \ 25,000 Raw Materials(all direct) Work in Process Finished Goods Inventories Beginning Ending \ 75,000 \ 85,000 \ 80,000 \ 30,000 \ 90,000 \ 110,000 -What was the cost of goods sold for the year (before disposition of any under- or overapplied overhead)?