Question
MNC provides customized engineering services to large manufacturing companies and uses a job-order costing system. The system provided the following information: MNC purchases materials as
MNC provides customized engineering services to large manufacturing companies and uses a job-order costing system. The system provided the following information:
MNC purchases materials as needed and consumes them during the accounting period. Therefore, it does not need to maintain a materials inventory account. The payroll amount includes salaries/wages paid to professional (direct) labour as well as indirect labour. Overhead is allocated to jobs using a predetermined overhead allocation rate based on professional labour costs computed at the beginning of the year. For 2016, MNC estimated its professional labour and overhead amounts to be $3.2 million and $768,000 respectively. |
Required: | |
1. | Compute the predetermined overhead allocation rate for the year. |
2. | Compute the following amounts for the month of July: |
June 30, 2016 July 31, 2016 Inventories Jobs in process $ 34,900 53,000 Information about July: Materials purchases Payroll Actual overhead incurred: 76,500 1,487,400 Supplies Indirect labour Other overhead costs 9,200 258,800 82,800 975,200 $2,943,500 Selling & administration Sales
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