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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.

  1. Compute the predetermined overhead application rate. 3 Marks
  2. Determine the total cost associated with each job 10 Marks
  3. Calculate the ending Work-in-Process Inventory. 2 Marks
  4. If Job As revenue was $50,000 cash, calculate the gross profit. 3 Marks
  5. Assuming no beginning Finished Goods Inventory calculate the cost of ending Finished Goods Inventory. 2 Marks
  6. How much was overhead overapplied or underapplied? How do we account for the difference ? 5 Marks

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