UCD Company uses a job costing accounting system for its production costs. A predetermined overhead rate based on direct labor-hours is used to apply overhead to individual jobs. An estimate of overhead costs at different volumes was prepared for the current year as follows:

The expected volume is 40,000 direct labor-hours for the entire year. The following information is for October, when jobs 1011 and 1015 were completed.

Required
Answer the following questions.
a. 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 $25 per direct labor-hour. Use this amount in answering requirements [b] through [e].)
b. Compute the total cost of Job 1011 when it is finished.
c. How much of factory overhead cost was applied to Job 1017 during October?
d. What total amount of overhead was applied to jobs during October?
e. Compute actual factory overhead incurred during October.
f. At the end of the year, UCD Company had the following account balances:
Balance
Underapplied Overhead . . . . . . . . . $ 3,000,000
Cost of Goods Sold . . . . . . . . . . . . . 28,000,000
Work-in-Process Inventory . . . . . . . . 4,000,000
Finished Goods Inventory . . . . . . . . 8,000,000

How would you recommend treating the Underapplied Overhead? Show the effect on the account balances in the following table.
Over-applied Overhead . . . . . . . . . . _________
Cost of Goods Sold . . . . . . . . . . . . . _________
Work-in-Process Inventory . . . . . . . . _________
Finished Goods Inventory . . . . . . . . _________

Transcribed Image Text:

Direct labor-hours Variable overhead costs. 40,000 $360,000 $480,000 $ 600,000 500,000 $860,000 $980,000 $1,100,000 30,000 50,000 Pae e900000 000$10 Fixed overhead costs 500,000 Total overhead.. . - ..-. Inventories, October 1 Raw materials and supplies42,000 work in process (Job 1011) Finished goods 91,300 227,900 Purchases of raw materials and supplies Raw materials Supplies -..-... - 629,000 79,300 Materials and supplies requisitioned for production Job 1011 .. Job 1015 . Job 1017 Supplies 281,000 234,500 47,200 76,700 $639,400 Machine-hours (MH) Job 1011 Job 1015 Job 1017 6,200 MH 6,100 MH 3,700 MH Direct labor-hours (DLH) Job 1011 Job 1015 14,000 DLH 6,100 DLH 3,700 DLH Job 1017 Labor costs Direct labor wages (all hours @ $12) .- .-.-.-.. .. Indirect labor wages (12,000 hours).. Supervisory salaries $285,600 63,000 128,000 Building occupancy costs (heat, light, depreciation, etc.) Factory facilities. .. Sales and administrative offices . . .. 36,900 14,200 Factory equipment costs Power....- Repairs and maintenance. Other 21,800 8,200 9,900 $ 39,900