Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Whitlock Manufacturing uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct materials costs to

Whitlock Manufacturing uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct materials costs to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows:

Direct materials costs $ 322,500 $ 413,500 $ 522,500
Variable overhead costs $ 464,400 $ 608,400 $ 752,400
Fixed overhead costs 384,000 384,000 384,000
Total overhead $ 848,400 $ 992,400 $ 1,136,400

Whitlock expects to spend $413,500 in direct materials costs over the entire year. The following information is for May, when Jobs WM-52 and WM-53 were completed:

Inventories, May 1
Materials and supplies $ 2,900
Work in process (Job WM-52) 15,000
Finished goods 29,600
Purchases of materials and supplies
Materials $ 35,300
Supplies 4,100
Materials and supplies requisitioned for production
Job WM-52 $ 12,800
Job WM-52 9,700
Job WM-54 6,700
Supplies 1,800
$ 31,000
Factory direct labor-hours (DLH)
Job WM-52 900 DLH
Job WM-53 750 DLH
Job WM-54 500 DLH
Labor costs
Direct labor wages (all hours @ $25.00) $ 53,750
Indirect labor wages (500 hours) 8,000
Supervisory salaries 9,300
Building occupancy costs (heat, light, depreciation, etc.)
Factory facilities $ 24,000
Sales and administrative offices 12,000
Factory equipment costs
Power $ 13,500
Repairs and maintenance 8,800
Other 13,000
$ 35,300

Required:

Compute the predetermined overhead rate (combined fixed and variable) to be used to apply overhead to individual jobs during the year.

(Note: Regardless of your answer to requirement [a], assume that the predetermined overhead rate is 225% of direct materials cost. Use this rate in answering requirements [b] through [f], as needed.)

Compute the total cost of Job WM-52 when it is finished.

How much of factory overhead cost was applied to Job WM-54 during May?

What total amount of overhead was applied to jobs during May?

Compute actual factory overhead incurred during May.

At the end of the year, Whitlock Manufacturing had the following account balances:

Underapplied overhead $ 51,000
Work-in-process inventory 22,800
Finished goods inventory 191,300
Cost of goods sold 1,848,900

Assuming that the underapplied overhead is not material, show the new account balances in the following table.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Managerial Accounting

Authors: Kurt Heisinger

1st Edition

0618436693, 978-0618436699

More Books

Students also viewed these Accounting questions

Question

Difference between amortization and depreciation ?

Answered: 1 week ago