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:

Question Content Area

A. Compute the predetermined overhead application rate. $fill in the blank f48748fd7fd5023_1

B. Determine the total cost associated with each job.

Job 10	$fill in the blank f48748fd7fd5023_2
Job 11	$fill in the blank f48748fd7fd5023_3
Job 12	$fill in the blank f48748fd7fd5023_4

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C. If Jobs 10 and 12 were completed, prepare the journal entry to transfer the cost.

blank	Accounts ReceivableFinished goodsMaterialsSalesWork in process	- Select -
	Accounts ReceivableFinished goodsMaterialsSalesWork in process		- Select -

Question Content Area

D. If Job 10 was delivered to customers that paid $50,000 in cash, prepare the journal entries.

blank	Accounts ReceivableCashFinished goodsMaterialsWork in process	- Select -
	Accounts PayableAccounts ReceivableFinished GoodsSales RevenueWork in process		- Select -
blank	Cost of goods soldFinished goodsMaterialsSalesWork in process	- Select -
	Accounts PayableCost of goods soldFinished goodsMaterialsWork in process		- Select -

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E. What is the gross margin for Job 10? $fill in the blank d8c3a2f51f9f047_1

F. What is the cost assigned to ending work in process? $fill in the blank d8c3a2f51f9f047_2

G. Assuming no beginning finished goods balance, what is the cost assigned to ending finished goods? $fill in the blank d8c3a2f51f9f047_3

H. How much was overhead over/underapplied? $fill in the blank d8c3a2f51f9f047_4

OverappliedUnderapplied