Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Playmore Costume Company, located in Toronto, sews costumes for plays and musicals. Playmore considers itself primarily a service firm, as it never produces costumes without

Playmore Costume Company, located in Toronto, sews costumes for plays and musicals.

Playmore considers itself primarily a service firm, as it never produces costumes without a pre-existing order and only purchases materials to the specifications of the particular job. Any finished goods ending inventory is temporary and is zeroed out as soon as the show producer pays for the order.

Overhead is applied on the basis of direct labour cost. During the first quarter of the year, the following activity took place in each of the accounts lists:

Work in Process

Bal. 17,000 I Complete 245,000

DL 80,000 I

OH 140,000 I

DM 40,000 I

Bal. 32,000

Finished Goods

Bal. 40,000 I Sold 210,000

Complete 245,000 I

Bal. 75,000

Overhead

138,500 I 140,000

Bal. 1,500 I

Cost of Goods Sold

210,000 I

I

Job 32 was the only job in process at the end of the quarter. A total of 1,000 direct labour at $10 per hour were charged to Job 32.

Required:

  1. Assuming the overhead is applied on the basis of direct labour cost, what was the overhead rate used during the first quarter of the year?

  1. What was the applied overhead for the first quarter? The actual overhead? The under-applied or over-applied overhead?

  1. What was the cost of the goods manufactured for the quarter?
  2. Assume that the overhead variance is closed to the Cost of Goods sold account. Prepare the journal entry to close out the Overhead Control Account. What is the adjusted balance in Cost of Goods Sold?
  3. For Job 32, identify the costs incurred for direct materials, direct labour, and overhead.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting And Controlling In SAP AFS Solution

Authors: David Jones

1st Edition

1521738092, 978-1521738092

More Books

Students also viewed these Accounting questions

Question

I receive useful feedback about my performance.

Answered: 1 week ago

Question

I am encouraged to offer opinions/suggestions.

Answered: 1 week ago