Estimated cost and operating data for two companies for the current year are given below: __ Company____________

A B

Direct labour hours 60,000 55,000

Average labour rate/hour $16 $18

Machine-hours 25,000 90,000

Raw materials cost $300,000 $160,000

Factory overhead costs $432,000 $270,000

Predetermined overhead rates are computed using the following bases:

Company Activity Base used

A Direct labour hours

B Machine-hours

Required:

1. Compute the predetermined overhead rate to be used in each company. (4 marks)

2. Three jobs are worked on during the year in Company B. Direct labour-hours recorded by job are: Job 308, 7,000 hours; Job 309, 30,000 hours; and Job 310, 21,000 hours. Actual machine hours are 88,000. The actual material costs were the same as estimated.

a) How much total applied overhead cost will Company B have for the year?

b) If actual OH costs in Company B are $272,000 for the year, will overhead be over or underapplied? By how much? (4 marks)

3. Prepare the journal entry to apply the total overhead during the year for Co.B.

(2 marks)

4. Prepare the journal entry to record the total cost of finished jobs in Company B if there was a

zero balance in ending work in process at the end of the year. Show your calculations. (5 marks)

5. Prepare the journal entries to record the total sale of all of the completed jobs for Company B. The jobs were sold for a total of $2.1 million. (4 marks