Question
Custom Job Inc (CJI) started using a job-order costing system using on a predetermined overhead rate based on machine hours. At the beginning of the
Custom Job Inc (CJI) started using a job-order costing system using on a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000. The following information pertains to March of the current year:
| Job A | Job B | Job C | Total |
Work-in-Process Inventory, Mar 1 | $16,000 | 26,000 | 38,000 | 80,000 |
During the month |
|
|
|
|
Materials Used | $4,000 | 4,800 | 7,200 | 16,000 |
Direct Labor | $2,400 | 3,600 | 4,000 | 10,000 |
Machine Hours | Mhr 400 | 700 | 900 | 2,000 |
Labor Hours | Lhr 120 | 180 | 200 | 500 |
Actual manufacturing overhead cost incurred in November was $61,000. At the end of the month Jobs A & C were completed. Assume Job A has already been delivered to customers.
- Compute the predetermined overhead application rate. 3 Marks
- Determine the total cost associated with each job 10 Marks
- Calculate the ending Work-in-Process Inventory. 2 Marks
- If Job As revenue was $50,000 cash, calculate the gross profit. 3 Marks
- Assuming no beginning Finished Goods Inventory calculate the cost of ending Finished Goods Inventory. 2 Marks
- How much was overhead overapplied or underapplied? How do we account for the difference ? 5 Marks
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