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 210,000 $ 900,000 $1,080,000 $1,260,000 630,000 $1,530,000 $1.710,000 $1.890,000 150,000 180,000 630,000 630,000 Total overhead 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: Inventories, March Materials and supplies Work-in-process (Job 6023) Finished goods 31,500 $163,000 $346,000 Purchases of materials and supplies Materials Supplies $404,000 $ 41,000 Materials and supplies requisitioned for production Job 6023 Job 6024 Job 6025 Supplies $139,000 112,500 77,500 19,000 $ 348,000 Factory direct labor-hours (DLH) Job 6023 Job 6024 Job 6025 10,000 DLH 9,000 DLH 5,500 DLH Labor costs Direct labor wages (all hours $8) Indirect labor wages (14,000 hours) Supervisory salaries 196,000 70,000 107,000 Building occupancy costs (heat, light, depreciation, etc.) Factory facilities Sales and administrative offices $ 18,500 8,000 Factory equipment costs Power Repairs and maintenance Other 10,000 5,000 7,500 $ 22,500 (Note: Regardless of your answer to requirement a, assume that the predetermined overhead rate is $8 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 9.50 per DLH b. Compute the total cost of Job 6023 when it is finished The total cost of Job 6023$462,000 c. How much of factory overhead cost was applied to Job 6025 during March? Factory overhead cost of Job 6025 $ 44,000 d. What total amount of overhead was applied to jobs during March? Total amount of overhead $196,000 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 2,850,000 111,000 237,000 Assuming that the overapplied overhead is not material, show the new account balances in the following table. Overapplied Overhead Cost of Goods Sold Work-in-Process Inventory Finished Goods Inventory
