QUESTION 2:

Cornerstone Exercise 5-1 (Algorithmic) Predetermined Overhead Rate, Overhead Application

At the beginning of the year, Pryor Company estimated the following costs: Overhead: $654,500 Direct labour cost: $935,000

Pryor Company uses normal costing and applies overhead on the basis of direct labour cost. (Direct labour cost is equal to total direct labour hours worked multiplied by the wage rate.) For the month of December, direct labour cost was $70,900.

Required:

1. Calculate the predetermined overhead rate for the year. Enter the percentage answer as a whole number. ______________% of direct labour cost

2. Calculate the overhead applied to production in December. $_______________

QUESTION 3:

Overhead Variance (Over- or Underapplied), Closing to Cost of Goods Sold

At the end of the year, Pryor Company provided the following actual information:

Overhead	$913,000
Direct labour cost	1,214,400

Pryor uses normal costing and applies overhead at the rate of 75 percent of direct labour cost. At the end of the year, Cost of Goods Sold (before adjusting for any overhead variance) was $1,780,000.

Required:

1. Calculate the overhead variance for the year. $________________ (Overapplied / OR Underapplied)

2. Dispose of the overhead variance by adjusting Cost of Goods Sold. Adjusted COGS $__________________________

QUESTION 4:

Convert Departmental Data to Plantwide Data, Plantwide Overhead Rate, Apply Overhead to Production

At the beginning of the year, Badger Company estimated the following:

	Cutting Department	Sewing Department	Total
Overhead	$378,000		$450,000		$828,000
Direct labour hours	131,200		200,000		331,200
Machine hours	210,000			210,000

Badger has decided to use a plantwide overhead rate based on direct labour hours. Actual data for the month of June are as follows:

	Cutting Department	Sewing Department	Total
Overhead	$32,612		$35,750		$68,362
Direct labour hours	11,800		16,000		27,800
Machine hours	17,840			17,840

Required:

1. Calculate the predetermined plantwide overhead rate. $_______per direct labour hour

2. Calculate the overhead applied to production for the month of June. $__________

3. Calculate the overhead variance for the month of June.

Overhead variance

$_______________ (Overapplied /OR Underapplied)

QUESTION 5:

Prepare Job-Order Cost Sheets, Predetermined Overhead Rate, Ending Balance of WIP, Finished Goods, and COGS

At the beginning of June, Donewell Company had two jobs in process, Job 44 and Job 45, with the following accumulated cost information:

	Job 44	Job 45
Direct materials	$4,800		$1,100
Direct labour	6,000		4,800
Applied overhead	3,700		2,960
Balance, June 1	$14,500		$8,860

During June, two more jobs (46 and 47) were started. The following direct materials and direct labour costs were added to the four jobs during the month of June:

	Job 44	Job 45	Job 46	Job 47
Direct materials	$2,500		$7,110		$1,800		$1,700
Direct labour	800		6,400		900		560

At the end of June, Jobs 44, 45, and 47 were completed. Only Job 45 was sold. On June 1, the balance in Finished Goods was zero.

Required:

1. Calculate the overhead rate based on direct labour cost. Round the percentage to the nearest whole number. For example, .6372 would be rounded to 64%. ________________%

2. A brief job-order cost sheet for the four jobs. Show the balance as of June 1 as well as direct materials and direct labour added in June. Apply overhead to the four jobs for the month of June, and show the ending balances. Round your answers to the nearest whole dollar. For those boxes in which no entry is required, enter "0".

	Job 44	Job 45	Job 46	Job 47
Beginning balance, June 1	$_________	$_________	$_________	$_________
Direct materials	______	______	______	______
Direct labour	______	______	______	______
Applied overhead	______	______	______	______
Total, June 30	$_________	$_________	$_________	$_________

3. Calculate the ending balances of Work in Process and Finished Goods as of June 30. Round your answers to the nearest dollar.

Work in process	$_________
Finished goods	$_________

4. Calculate the Cost of Goods Sold for June. Round your answer to the nearest dollar. $_________