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Arbo Corporation, which uses a job-costing system, had two jobs in process at the start of February 2020: Job no. B4 with a cost of
Arbo Corporation, which uses a job-costing system, had two jobs in process at the start of February 2020: Job no. B4 with a cost of $110,000 and job no. C1 with a cost of $12,000. The following information is available:
- The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $3,276,000 and 104,000 hours, respectively.
- The company worked on four jobs during February. Direct materials used, direct labor incurred, and machine hours consumed were:
Job No. | Direct Material | Direct Labor | Machine Hours |
B4 | 148,000 | 130,000 | 1,500 |
C1 | 155,000 | 99,000 | 1,100 |
C2 | 220,000 | 140,000 | 2,500 |
C3 | 70,000 | 85,000 | 1,400 |
- Manufacturing overhead during February included charges for depreciation ($47,000), indirect labor ($78,000), indirect materials used ($38,000), and other factory costs ($41,000).
- Arbo completed job no. B4 and job no. C1. Job no. B4 was sold for cash, producing a gross profit of $142,600 for the firm.
Required:
- Compute the company's predetermined overhead application rate. State it in terms of cost per machine hour.
Predetermined overhead rate per machine hour: |
- Compute Total Manufacturing costs (use applied overhead - not actual overhead).
Total manufacturing costs: |
- Compute the (unadjusted) Cost of Goods Sold.
Cost of goods sold: |
- Compute the Cost of Goods Manufactured (use applied overhead - not actual overhead).
Cost of goods manufactured: |
- Compute the cost of Ending Work-in-Process Inventory (use applied overhead - not actual overhead).
Cost of Ending Work-In-Process Inventory: |
- Compute (and identify) the amount of over- or under-applied overhead.
Over- or under-applied overhead (and which one): |
Show computations here:
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