Question
Terminus Company completed two jobs during January, Job Z-15 and Job W-20. Completing Job Z-15 required an additional $2,720 in direct labour and completing Job
Terminus Company completed two jobs during January, Job Z-15 and Job W-20. Completing Job Z-15 required an additional $2,720 in direct labour and completing Job W-20 required $1,296 in direct materials and $8,000 in direct labour.
The details of the two jobs in process on January 1 are as follows:
Job Z-15
Job W-20
Direct Materials
$ 2,038
$ 1,280
Direct Labour
768
3,360
On January 1 the Materials Inventory balance was $11,040, and $1,392 worth of materials was purchased during the month. Indirect materials of $672 were withdrawn from materials inventory.
Terminus allocates overhead to jobs at an estimated rate of 50 percent of direct labour costs. Terminus used a total of $3,768 of direct materials (excluding the $672 indirect materials) during the period and total direct labour costs during the month were $10,720. In addition, during the month they incurred 2,450 in utilities costs, 1,200 in depreciation expenses and $3,600 in rent.
Question
- Compute the total costs to manufacture Job Z-15 and Job W-20.
- During the month of January was Terminus' overhead over or under applied and by how much? Assume the amount of under/over applied overhead is insignificant. Prepare the journal entry to write off the overhead assuming Terminus uses the two account approach for overhead.
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