Problem 4-44 Application of Overhead [LO 4-3, 4-4, 4-5]

The following information applies to the ODonnell Company for March production. There are only two jobs (X and Y) in production in March.

1. Purchased direct materials and indirect materials with the following summary of receiving reports:

Material A	$	20,500
Material B		14,250
Indirect materials		5,250
Total	$	40,000

1. Issued direct materials and indirect materials with this summary of requisitions:

	Job X				Job Y				Total
Material A	$	8,900			$	17,800			$	26,700
Material B		3,900				8,900				12,800
Subtotal	$	12,800			$	26,700			$	39,500
Indirect materials										41,250
Total									$	80,750

1. Factory labor incurred is summarized by these time tickets:

Job X	$	23,800
Job Y		15,900
Indirect labor		30,250
Total	$	69,950

1. Factory utilities, factory depreciation, and factory insurance incurred is summarized as follows:

Utilities	$	3,900
Depreciation		19,800
Insurance		3,400
Total	$	27,100

1. Factory overhead costs were applied to jobs at the predetermined rate of $50.50 per machine hour. Job X incurred 1,100 machine hours; Job Y used 800 machine hours.
2. Job X was completed; Job Y was still in process at the end of March.

The company closed the overapplied or underapplied overhead to the Cost of Goods Sold account at the end of March.

Required:

1. Calculate the total manufacturing cost for Job X and Job Y for March.

2. Calculate the amount of overapplied or underapplied overhead and state whether the Cost of Goods Sold account will be increased or decreased by the adjustment.

1. Total manufacturing costs - Job X Total manufacturing costs - Job Y 2. Cost of goods sold