It's about Job ordering cost. I have 8 questions to ask. (see the file attached) I already answered 6 questions out of 8. I want you to check whether my answer is correct or not and, to answer rest of 2 questions. Thanks!
High Desert Potteryworks makes a variety of pottery products that it sells to retailers such as Home Depot. The company uses a job-order costing system in which predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labour cost. At the beginning of the year, the company's management made the following estimates: Department Molding Direct labour-hours Machine-hours Direct materials cost Direct labour cost Manufacturing overhead cost Painting 12,000 70,000 $510,000 $130,000 $602,000 Job 205 was started on August I and completed on August 10. The company's cost records show the following information concerning the job: Department Molding Painting Direct labour-hours 30 Machine-hours 110 Materials placed into production $470 Direct labour cost $290 60,000 8,000 $650,000 $420,000 $735,000 85 20 $332 $680 Required: 1. Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting Department. My answer) POHR (Molding) = $602,000/70,000mh = $8.6 POHR (Painting) = $735,000/420,000DLC = $1.75 2. Compute the total overhead cost applied to Job 205. My answer) Molding = $8.6 X 110mh = $946 Painting = $1.75 X $680 = $1,190 Therefore, Total OH= $2,136 3. What would be the total cost recorded for Job 205? If the job contained 50 units, what would be the unit product cost? My answer) Job 205 Molding Direct Materials cost Direct labour cost Manufacturing overheard cost Total cost Total cost of Job 205 Painting $470 $290 $946 $332 $680 $1190 $1,706 $2,202 $3,908 If, the job contained 50 units, product cost will be $470X50units = $23,500 in Molding, $332X50units = $16,600 in Painting. 4. At the end of the year, the records of High Desert Potteryworks revealed the following actual cost and operating data for all jobs worked on during the year: Department Molding Painting Direct labour-hours 10,000 62,000 Machine-hours 65,000 9,000 Direct materials cost $430,000 $680,000 Direct labour cost $108,000 $436,000 Manufacturing overhead cost $600,000 $750,000 What was the amount of underapplied or overapplied overhead in each department at the end of the year? My answer) Molding = overapplied overhead $2,000 Painting = underapplied overhead $15,000 5. Assume the company closes any underapplied or overapplied overhead directly to Cost of Goods Sold. Prepare the appropriate journal entry. My answer) Overhead is over applied by $2,000 in Molding department, is under applied by $15,000 in Painting department and, for the year. The entry to close this balance to Cost of Goods Sold would be: Manufacturing Overhead.................................. $2,000 Cost of Goods Sold..................................... $2,000 Cost of Goods Sold..........................................$15,000 Manufacturing Overhead............................. $15,000 6. Assume the company closes any underapplied or overapplied overhead directly to the appropriate inventory and Cost of Goods Sold accounts on the basis of their ending balances at the end of the year. The balances in the inventory and cost of goods sold accounts are as follows: Raw materials $ 350,000 Work-in-process 140,000 Finished Goods 700,000 Cost of Goods Sold 1,960,000 Prepare the journal entry to show the allocation. My answer) Molding department (Overapplied) Raw materials Work-in-process Finished Goods Cost of Goods Sold Total $ 350,000 140,000 700,000 1,960,000 3,150,000 11% 5% 22% 62% 100% Allocation of $2,000 220 100 440 1,240 2,000 11% 5% 22% 62% 100% Allocation of $15,000 1,650 750 3,300 9,300 15,000 Painting department (Underapplied) Raw materials Work-in-process Finished Goods Cost of Goods Sold Total $ 350,000 140,000 700,000 1,960,000 3,150,000 The entry to close this balance to Cost of Goods Sold would be: Manufacturing Overhead.................................. $2,000 Raw materials........................................... $220 Work-in-process........................................ $100 Finished Goods......................................... $440 Cost of Goods Sold.................................... $1,240 Raw materials.............................................. $1,650 Work-in-process.......................................... $750 Finished Goods............................................. $3,330 Cost of Goods Sold.......................................... $9,300 Manufacturing Overhead............................. $15,000 Can you give me answer? 7. How much higher or lower will net operating income be for the year if the underapplied or overapplied overhead is allocated rather than closed directly to Cost of Goods Sold. 8. Provide two reasons why overhead might be under applied in a given year
