P2 -1CComputethemanufacturingoverheadrateandunder-oroverappliedoverheadAriesManufacturingusesajobordercostsystemandappliesoverheadtoproductiononthebasisofdirectlaborhours.onlyjobinprocess.ThecostsincurredpriortoJanuary1onthisjobwereasfollows:directmaterials$10,000;directlabor$6,000;andmanufacturingoverhead$9,000.JobNo.23hadbeencompletedatacostof$45,000andwaspartoffinishedgoodsinventory.Therewasa$5,000balanceintheRawMaterialsInventoryaccount.

DuringthemonthofJanuary,thecompanybeganproductiononJobs26and27,andcompletedJobs25and26.Jobs23and25weresoldonaccountduringthemonthfor$65,000and$74,000,respectively.Thefollowingadditionaleventsoccurredduringthemonth.

1.Purchasedadditionalrawmaterialsof$46,000onaccount.

2.Incurredfactorylaborcostsof$31,900.Ofthisamount$7,000relatedtoemployerpayrolltaxes.

3.Incurredmanufacturingoverheadcostsasfollows:indirectmaterials$10,000;indi-rectlabor$7,500;depreciationexpense$12,000;andvariousothermanufacturingoverheadcostsonaccount$11,000.

4.Assigneddirectmaterialsanddirectlabortojobsasfollows.

JobNo.

25

26

27

DirectMaterials

$5,000

15,000

13,000

DirectLabor

$3,000

12,000

9,900

5.Thecompanyusesdirectlaborhoursastheactivitybasetoassignoverhead.Directlaborhoursincurredoneachjobwereasfollows:JobNo.25,200;JobNo.26,800;andJobNo.27,660.

Instructions

(a)Calculatethepredeterminedoverheadratefortheyear2014,assumingAriesManufacturingestimatestotalmanufacturingoverheadcostsof$450,000,directlaborcostsof$300,000,anddirectlaborhoursof20,000fortheyear.(b)OpenjobcostsheetsforJobs25,26,and27.EntertheJanuary1balancesonthejobcostsheetforJobNo.25.(c)Inassigningmanufacturingover-headcosts,usetheoverheadratecalculatedin(a).Postallcoststothejobcostsheetsasnecessary.(d)Totalthejobcostsheetsforanyjob(s)completedduringthemonth.

(e)WhatisthebalanceintheWorkinProcessInventoryaccountattheendofthemonth?Whatdoesthisbalanceconsistof?

(f)Whatistheamountofoverorunderappliedoverhead?

(a) Computethemanufacturingoverheadratefortheyear.

Estimatedtotaloverheadcost. Value

Estimatedlaborhours. Value

Overheadrate ?

(b)

JobCostSheets

JobNo.25

Date.

DirectMaterials. Value

DirectLabor Value

Manufacturing OverheadBeg. Value

Jan.ValueValueValue???

Costofcompletedjob

Directmaterials

Directlabor

Manufacturingoverhead

Totalcost?

JobCostSheets

JobNo.27

Date

DirectMaterials Value

DirectLabor Value

ManufacturingValue

OverheadBeg.Value

Jan.

Value Costofcompletedjob

Directmaterials

Directlabor

Manufacturingoverhead

(f)Manufacturing

Overhead

Actual Value

Applied Value Value

Totalcost?