Exercise # 5-9

period were Required: 1. Determine the amount of underapplied or overapplied manufacturing What is the effect on gross margin for the period? 2 EXERCISE 5-9 Applying Overhead in a Service Company (LO2. LO3, L05) Drew Architectural Design began operations on January 2. The following activity was recorded in the company's Work in Process account for the first month of operations: 570,000 Work in Process Costs of subcontracted work 90,000 To completed projects Direct staff costs 200,000 Studio overhead 320,000 Drew Architectural Design is a service firm, so the names of the accounts it uses are different from the names used in manufacturing companies. Costs of Subcontracted Work is comparable to Direct Materials. Direct Staff Costs is the same as Direct Labour, Studio Overhead is the same as Manufacturing Overhead, and Completed Projects is the same as Finished Goods. Apart from the dif- ference in terms, the accounting methods used by the company are identical to the methods used by manufacturing companies. Drew Architectural Design uses a job-order costing system and applies studio overhead to Work in Process on the basis of direct staff costs. At the end of January, only one job was still in process. This job (the Kareen Corporation Headquarters project) had been charged with $13.500 in direct staff costs. Chapters Systems Design Job Order Costing Head pleted Kareen Corp Ringwinn: Compute the predetermined overhead rate that was in use during January Complete the following job cost sheet for the partially completed Kareen Corp 2 project: Job Cost Sheet Kareen Corporation Headquarters Project As of January 31 Costs of subcontracted work ... Direct staff costs Studio overhead.... Total cost to January 31..... EXERCISE 5-10 Schedules of Cost of Goods Manufactured and Cost of Goods Sold: Inen Statement [106] The following data from the just completed year are taken from the accounting records of Beel Company: Sales Direct labour cost .......... Raw material purchases .......... Selling expenses ... Administrative expenses........... Manufacturing overhead applied to work in process .. Actual manufacturing overhead costs............. $643,000 90,000 132,000 100,000 43,000 210,000 220,000 entory Beginning Endo