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

DM40,000 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.