Kansas Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows: Direct labor-hours Variable overhead costs Fixed overhead costs Total overhead 150,000 $1,050,000 648,000 $1,698,000 180,000 $1,260,000 648,000 $1,908,000 210,000 $1,470,000 648,000 $2,118,000 The expected volume is 180,000 direct labor-hours for the entire year. The following information is for March, when Jobs 6023 and 6024 were completed. $ 31,500 $ 162,000 $ 337,500 Inventories, March 1 Materials and supplies Work-in-process (Job 6023) Finished goods Purchases of materials and supplies Materials Supplies Materials and supplies requisitioned for production Job 6023 Job 6024 Job 6025 Supplies $ 405,000 $ 45,000 $ 135,000 112,500 76,500 18,000 $ 342,000 Factory direct labor-hours (DLH) Job 6023 Job 6024 Job 6025 10,500 DLH 9,000 DLH 6,000 DLH $ 204,000 51,000 108,000 Labor costs Direct labor wages (all hours @ $8) Indirect labor wages (12,000 hours) Supervisory salaries Building occupancy costs (heat, light, depreciation, etc.) Factory facilities Sales and administrative offices Factory equipment costs Power Repairs and maintenance Other $ 19,500 7,500 12,000 4,500 7,500 $ 24,000 (Note: Regardless of your answer to requirement (a), assume that the predetermined overhead rate is $9 per direct labor-hour. Use this amount in answering requirements [b] through [e].) Required: a. Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year. (Round your answer to 2 decimal places.) Predetermined overhead rate per DLH b. Compute the total cost of Job 6023 when it is finished. The total cost of Job 6023 c. How much of factory overhead cost was applied to Job 6025 during March? Factory overhead cost of Job 6025 d. What total amount of overhead was applied to jobs during March? Total amount of overhead e. Compute actual factory overhead incurred during March. Actual factory overhead incurred f. At the end of the year, Kansas Company had the following account balances: Overapplied overhead Cost of goods sold Work-in-process inventory Finished goods inventory $ 3,000 2,940,000 114,000 246,000 Assuming that the overapplied overhead is not material, show the new account balanc following table. Overapplied overhead Cost of goods sold Work-in-process inventory Finished goods inventory
