Farrer Manufacturing Company uses a job order costing system. All relevant

information for Jobs #203 and #204, which were completed during May, is provided

here. No other jobs were in process during the month of May.

Job #203 Job #204

Direct material cost $10,000 $13,000

Direct labor cost $7,800 $10,800

Direct labor hours on job. $800 $1,400

Units produced 1,000 1,750

A predetermined overhead rate of $12 per direct labor hour is used to apply

manufacturing overhead costs to jobs. Actual manufacturing overhead for the month of

May totaled $25,000. All completed products are delivered to customers immediately

after completion, so costs are transferred directly to Cost of Goods sold without going

through Finished Goods Inventory.

1. How much MOC will be assigned to each job completed during May?

2. Compute the total cost of each job.

3. Compute the unit cost for each job.

4. Compute the over- or underapplied manufacturing overhead for May.

5. prepare the journal entries to transfer the cost of direct materials, direct labor and

MOC to Work-In-Process and to transfer the cost of completed jobs to Cost of Goods

Sold.

6. How would the company have computed its predetermined overhead rate of $12 per

direct labor hour? Explain