Question
Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated
Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.
At the beginning of the year, the company estimated that the manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.
The following information pertains to December of the current year:
Job 10 | Job 11 | Job 12 | Total | |||||
Work in process, Dec. 1 | $16,000 | $26,000 | $38,000 | $80,000 | ||||
December production activity: | ||||||||
Materials requisitioned | $4,000 | $4,800 | $7,200 | $16,000 | ||||
Direct labor cost | 2,400 | 3,600 | 4,000 | 10,000 | ||||
Machine hours | 400 hrs. | 700 hrs. | 900 hrs. | 2,000 hrs. | ||||
Labor hours | 120 hrs. | 180 hrs. | 200 hrs. | 500 hrs. |
Actual manufacturing overhead cost incurred in December was $61,000.
Required:
A. Compute the predetermined overhead application rate. $
B. Determine the total cost associated with each job.
Job 10 | $ |
Job 11 | $ |
Job 12 | $ |
C. If Jobs 10 and 12 were completed, prepare the journal entry to transfer the cost.
D. If Job 10 was delivered to customers that paid $50,000 in cash, prepare the journal entries.
E. What is the gross margin for Job 10? $
F. What is the cost assigned to ending work in process? $
G. Assuming no beginning finished goods balance, what is the cost assigned to ending finished goods? $
H. How much was overhead over/underapplied? $
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