Chapter 10 Problem Set Overhead is applied to jobs based on this rate. It is likely that the actual overhead costs and activry level will be different than the estimated overhead cost and estimated activity level. The result is an amount of over/under applied overhead that is expened to cost of goods sold. APPLY THE CONCEPTS: Job Order Casting At the beginning of the year, Carentan Company estimated the following: Machining Assembly Department Department Total Overhead $324,000 $249,500 5571,500 Direct labor hour 130,000 150,000 250,000 Machine hours 180,000 180,000 Carentan uses departmental overhead rates. In the machining department, overhead is applied on the basis of machine hours. In the assembly department, overhead is applied on the basis of direct labor hours. Actual data for the month of January are as follows: Machining Assembly Department Department Total Overhead 325,000 524,600 $49,600 Direct labor hours 10.000 14,000 24,000 Machine hours 15.000 15,000 Complete the following tablet required, round your answers to the nearest cent. Machining Department Assembly Department Pretermined overhead rate per machine how per director hour Overheadopted in January Variance Overorolled Chapter 10 Problem Set Source: Job Cost Sheets: Job1 Job 2 Job 3 Job4 Direct materials $ 740 $570 5400 $360 Direct labor 110 100 100 120 Overhead 150 120 110 145 $1,000 5790 5610 5625 Use the flow chart to complete the following sentences. The ending inventory balance in the Work in Process Assembly Deptis The cost of goods transferred into the work in Process-Test & Packaging Dota $ The cost of goods transferred out of the Work in Process Test & Packaging Dept Dept is: The ending Inventory balance in the Work in Process Test a packaging Deptie A is the primary document for accumulating all costs related to a specific job. Materials are recorded to jobs based on a materiis requisition and labor in charged to jobs based on a timecard, or labor accumulation system. Overhead is applied based on a The rate may be based on direct labor hours, machine hours, o another activity. It may be a dollar amount or a percentage Assume the company has estimated overhead costs for the coming year of $1,120,000 and expected activy 1 80,000 orect labor hours. The formula for calculating the overhead rate ist Overhead vite Estimated overhead costs Activity direct labor hours per direct labor hour Overhead in topled to jobs based on this rate. It is likely that the actual overhead easts and activity vet will be different than the estimated overhead cut and estimated setvny devet. The results on amount of over/under applied overed that is expened to cost of goods sold APPLY THE CONCEPTS Job Order Costing Chapter 10 Problem Set Mastery Problem: Job Order Costing (Basic) A job order costing system is uwd when a company produces a product or provides a service that is unique that is, the cost of one product or service is different than that of another A Job order conting must be able to identify each individual job and accumulate its costs separately from the costs of other jobs. In manufacturing, the jobs may be for a single item or a batch of similar items. The flowchart illustrates the flow of costs into Work in Process and Finished Goods in a job order casting system, Cost Flows in a Job Cost System Materials Work In Process Assembly Dept Work In Process- Test & Packaging Dept Finished Goods Be Inventory Cost of Units Beginventory Cost of Units Beginventory Beg Inventory Direct Materials transferred out Cost of Goods + Purchases Cost of units Direct Materials + Cost of units transferred out Direct Labor transferred in Sold Job transferred in Direct Labor 1 5. Factory Overhead applied Factory Overhead applied 1,2,3 End Inventory End Inventory End Inventory End Inventory Factory Overhead Actual Factory Overhead tities expense Factory overhead depreciation of pod machinery Costs to date by are shown Source Son Cost Shoes