Question
The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 43,000 machine-hours
The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 43,000 machine-hours and incur $197,800 in manufacturing overhead cost. The following transactions occurred during the year: |
a. | Raw materials requisitioned for use in production, $241,000 (80% direct and 20% indirect). |
b. | The following costs were incurred for employee services: |
Direct labor | $ | 167,000 | |
Indirect labor | $ | 25,000 | |
Sales commissions | $ | 17,000 | |
Administrative salaries | $ | 32,000 | |
c. | Heat, power, and water costs incurred in the factory, $52,000. | ||||
d. | Insurance costs, $17,000 (90% relates to factory operations, and 10% relates to selling and administrative activities). | ||||
e. | Advertising costs incurred, $57,000. | ||||
f. | Depreciation recorded for the year, $67,000 (85% relates to factory operations, and 15% relates to selling and administrative activities). | ||||
g. | The company used 47,000 machine-hours during the year. | ||||
h | Goods that cost $487,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. | ||||
i. | Sales for the year totaled $714,000. The total cost to manufacture these goods according to their job cost sheets was $482,000. ---------
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