Question 1 Ted Crilly, the controller for Craggy Manufacturing Co, is in the process of analysing the overhead costs for the month of October. He has gathered the following data for the month. Labour Direct Labour hours Job 949 3,500 Job 950 3,000 Job 951 2,000 Labour costs Direct labour wages $204,000 Indirect labour wages 15,000 Supervisory salaries 6,000 Material Inventories, 1st October Raw material and supplies 10,500 WIP (Job 949) 54,000 Finished Goods (Job 948) 112,500 Purchases of raw materials and supplies Raw material $135,000 Supplies 15,000 Direct materials and Supplies requisitioned for production Job 949 $45,000 Job 950 37,500 Job 951 25,500 Supplies 12.000 Other Depreciation (Straight line method) $6,400 Property taxes 1,500 Plant Electricity 4,100 Advertising 1,500 Plant Insurance 1,000 Selling expenses 1,000 Material handling 1,500 The firm's job-order costing system uses direct labour hours as the cost driver for overhead application. The firm uses normal costing. In December of the preceding year, in budgeting for the current year, Ted estimated that the normal annual usage is 120,000 direct labour hours and predicted $606,000 in overhead costs. During October the firm completed Job 949 and Job 950. Job 948 and Job 950 were sold on account, producing a 10% mark-up. Required: 1. Calculate: a. Total Actual Overhead b. Calculate the Actual OH Rate based on direct labour hours c. Determine the OH amount allocated to each job. 2. Identify the jobs that represent the closing balances of WIP, FG and COGS. 3. Using Job Cost Sheets: a. Recognise costs of jobs in opening inventory balances b. For each job worked this month, calculate DM used, DL used, OH Applied and the total cost of Jobs at end of the month. 4. Prepare a Schedule of Cost of Goods Sold for the month. 5. Calculate the amount of under- or over-applied OH (OH variance). 6. Dispose of the OH variance using: a. Direct write-off method (to COGS) b. Proration method. 7. Supposed that this company uses direct write-off method to dispose of the OH variance. Prepare a Profit and Loss Statement for the month (to the Gross Margin only)