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Question 1 Modern Cabinets has decided to price its cabinets at 60% above cost. The problem is that they aren't sure how to assign factory
Question 1
Modern Cabinets has decided to price its cabinets at 60% above cost. The problem is that they aren't sure how to assign factory overhead. Your manager has asked you to price the following two jobs based on the information provided:
- Estimated factory overhead for the year: $600,000
- Estimated direct labor hours for the year: 200,000
- Job 1 has incurred $3,000 of direct materials and $2,000 of direct labor, which is consistent with 200 hours of labor.
- Job 2 has incurred $3,500 of direct materials and $3,000 of direct labor, which is consistent with 300 hours of labor.
Question 2
- Assuming Modern Cabinets applies $510,000 of factory overhead to all of its jobs this year but has actual factory overhead of $505,000, has overhead been over- or underapplied?
- If the current COGS is $2,000,000, what should the ending COGS be after reconciling the actual and applied overhead?
Question 3
Prepare the journal entries needed based on the information below. Use the lesson example to assist you:
- Estimated overhead for the month: $10,000
- Estimated direct labor hours: 10,000
- Purchased $30,000 of materials
- Requisitioned $25,000 of materials to be placed into production
- Incurred $95,000 of direct labor during the month (9,500 hours)
- Incurred the following actual factory overhead amounts:
- Utilities: $6,000
- Indirect materials: $300
- Indirect labor: $1,200
- Rent: $1,500
- Completed two jobs with a cost of $12,000
- Sold both jobs completed at a price = cost + 60%
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