E and F only

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Script Company uses a job costing accounting system for its production costs. A predetermined overhead rate based on direct labor-hours is used to apply overhead to individual jobs. An estimate of overhead costs at different volumes was prepared for the current year as follows.

Direct labor-hours		30,500			40,500			51,000
Variable overhead costs	$	396,500		$	526,500		$	663,000
Fixed overhead costs		501,900			501,900			501,900
Total overhead	$	898,400		$	1,028,400		$	1,164,900

The expected volume is 40,500 direct labor-hours for the entire year. The following information is for October, when jobs 1011 and 1015 were completed.

Inventories, October 1
Raw materials and supplies	$	42,400
Work in process (Job 1011)		93,200
Finished goods		228,500
Purchases of raw materials and supplies
Raw materials		630,400
Supplies		79,800
Materials and supplies requisitioned for production
Job 1011		280,200
Job 1015		232,800
Job 1017		46,800
Supplies		76,500
	$	636,300
Machine-hours (MH)
Job 1011		6,216 MH
Job 1015		6,118 MH
Job 1017		3,701 MH
Direct labor-hours (DLH)
Job 1011		14,050 DLH
Job 1015		6,170 DLH
Job 1017		3,710 DLH
Labor costs
Direct labor wages (all hours @ $11)	$	263,230
Indirect labor wages (12,400 hours)		65,100
Supervisory salaries		127,000
Building occupancy costs (heat, light, depreciation, etc.)
Factory facilities	$	36,400
Sales and administrative offices		14,190
Factory equipment costs
Power	$	21,790
Repairs and maintenance		8,120
Other		9,870
	$	39,780

Required:

a. Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year.

(Note: Regardless of your answer to requirement [a], assume that the predetermined overhead rate is $25.89 per direct labor-hour. Use this amount in answering requirements [b] through [e].)

b. Compute the total cost of Job 1011 when it is finished.

c. How much of factory overhead cost was applied to Job 1017 during October?

d. What total amount of overhead was applied to jobs during October?

e. Compute actual factory overhead incurred during October.

f. At the end of the year, Script Company had the following account balances:

		Balance
Underapplied overhead	$	4,200,000
Cost of goods sold		65,800,000
Work-in-process inventory		9,400,000
Finished goods inventory		18,800,000

Show the Underapplied Overhead effect on the account balances in the following table.